Hilton and her friend Jennifer Rovero were arrested for carrying a joint at the Brazil-Netherlands quarter-final match in the southern city of Port Elizabeth.
They appeared in a special World Cup court, at 12.20am on Saturday local time (8.20am AEST on Saturday), about six hours after the match, where Hilton was named "Accused No. 1" in the case.
"The charges against you, Accused No.1, are dropped," an almost apologetic magistrate Xolile Dlulisa said.
"Thank you, your honour," Hilton replied and left the three-minute hearing.
Rovero, 31, a New York-based freelance photographer and Playboy Playmate of the month for July 1999, told the court she was in possession of the cannabis, pleaded guilty, and was fined 1000 rand ($A154).
Their lawyer Terry Price said the charges were dropped against Hilton, 29, because Rovero was actually holding the joint when they were arrested.
Hilton later wrote on Twitter: "Hey guys, there's a lot of crazy rumours going around. Just want you all to know the truth. Everything is completely fine. I was not charged or arrested, cause I didn't do anything."
She said she was helping police with their investigation.
"Everyone was super nice and friendly to me," Hilton wrote. "I love South Africa! Such an amazing place, especially during The World Cup! Hope that clears everything up."
She arrived at the courthouse wearing a white T-shirt with a lion on the front, green trousers and brown boots about 30 minutes after being arrested and charged. She appeared relaxed, smiling at court officials with her blonde hair pulled into two ponytails.
The socialite wore an off-white sleeveless blouse in court and she had heavy black eyeliner.
While she waited for the hearing, people with FIFA badges were seen bringing her seven pizzas, 12 cold drinks and six waters in an antechamber.
The magistrate, who was sweating and wiping his head during the hearing, seemed almost apologetic in handing down his verdict.
"It's very difficult for a human being to decide the fate of another human being. There's no magic formula," he said.
"It's unfortunate that while you're a visitor to this country you find yourself on the wrong side of the law."
Hilton pleaded no contest in 2007 to alcohol-related reckless driving and was sentenced to 45 days in jail.
After spending about 23 days in jail, Hilton said in a television interview that the experience caused her to re-evaluate the role partying played in her life.
She said she wanted "to help raise money for kids and for breast cancer and multiple sclerosis".
A darling of the tabloids, Hilton, the great-granddaughter of the Hilton hotel chain's founder, first shot to fame in 2003 when her boyfriend leaked a video of their sexual escapades on the internet.
ninemsn 3 Jul 2010
Another timeless example of how the same law imprisons the childeren of the masses, whilst 'socialites' are excused from their crimes, as it is in the name of partying.
Emphasis from the strictly controlled media is to put this 'entertainment' trash on a pedestal to be the role model of the impressionable teens of the masses to degrade their values.
Their so called troubles' are carefully orchestrated publicity stunts.