Busch was accused by Patricia Driscoll of grabbing her by the throat and slamming her head against the wall in his motor home at Dover International Speedway in September.
"After a thorough consideration of all of the available information about the case, it is determined that the admissible evidence and available witnesses would likely be insufficient to meet the burden of establishing beyond a reasonable doubt that Mr. Busch committed a crime during the September 26th incident," Delaware Department of Justice public information officer Carl Kanefsky said in a statement.
"Likelihood of meeting that high burden of proof is the standard for prosecutors in bringing a case. For this reason, the Department of Justice will not pursue criminal charges in this case."
In a statement Thursday, Busch said he is grateful that the prosecutors decided not to file charges.
"I wish to thank my family, friends, fans, and race team who stood by me throughout this nightmare with their unwavering support," Busch said. "Thanks also goes to my legal team for making sure that the truth got out and was fully provided to the prosecutors. As I have said from the beginning, I did not commit domestic abuse. I look forward to being back in racing as soon as possible and moving on with my life."
While Busch will not be charged, he must stay away from Driscoll for one year, a Kent County, Delaware, family court commissioner ruled in February. Driscoll had requested a no-contact order against Busch.
Stemming from the family court ruling, NASCAR suspended Busch indefinitely
shortly before the Daytona 500. That decision was upheld after appeal. CNN has reached out to NASCAR for an update on Busch's status but did not immediately hear back.
"Patricia and I are very disappointed that Kurt will not be prosecuted for the abusive acts he committed in September," Driscoll's attorney, Carolyn McNeice, said Thursday. "The (attorney general's) decision, however, only makes the order that we received for protection from abuse that much more important.
"As you can see, in some cases, this is the only protection the victim will get. This civil no contact order is a critical tool for protecting victims."
Busch's attorney, Rusty Hardin, previously has said that he would appeal the family court ruling and would continue to work to clear Busch's name.
At the no-contact hearing, Busch testified that he believes Driscoll is a trained assassin
for the U.S. government and that she once showed up wearing a gown covered in blood.
Driscoll is a defense contractor and is authorized to carry weapons. McNeice has said that her client denies Busch's allegations.