The five-judge panel, formed by Pakistan's Supreme Court in November 2016 to investigate Sharif, delivered its ruling after two months of deliberation.
Rather than finding for or against Sharif, the panel ordered a new investigation, which will seek testimony from the Prime Minister and his sons. The decision was 3-2.
In a statement, the court said it needed more information about the alleged money trail.
The court will deliberate the new investigation's finding "after 60 days," Pakistan constitutional legal expert Farogh Naseem told CNN.
"The same five-judge panel will deliberate on this and make a judgment," he said. "The matter is still very much in the hands of the judiciary."
Panama Papers link
Calls for an investigation began when three of Sharif's children, his sons Hussain and Hasan and his daughter Maryam,
were named in the massive Panama Papers document leak
in April 2016.
Local media reported they were linked to offshore companies that owned properties in London.
Following mass protests and calls from opposition political groups, a panel was formed in November 2016 to investigate links between Sharif and his children's alleged offshore accounts.
About 500 security personnel were deployed in advance of Thursday's decision, with access to the Pakistan Supreme Court sealed except for those with special passes.
Before the ruling, Maryam Sharif thanked her father's supporters on her official Twitter account. "Whatever the verdict, am amazed and humbled to see the overwhelming support for Nawaz Sharif," she tweeted Thursday. "For a leader, that's the most prized possession."
The leader of the opposition Pakistan Movement for Justice party said in a statement the ruling would "change the dynamics of politics in Pakistan."
"All the parties had called for Panama probe in National Assembly. To seek justice is the only aspiration behind this struggle," Imran Khan said.
Allegations of corruption
The Panama Papers refers to a huge cache of leaked documents dating back four decades that are allegedly connected to Panama law firm Mossack Fonseca.
They were published by the International Consortium of Investigative Journalists
after an extensive probe involving several news organizations.
Among the documents were the names of world leaders, public officials and celebrities
whose assets, such as money and property, allegedly were linked to secret shell companies and offshore accounts.
While owning overseas property is not a crime in Pakistan, questions were raised about where Sharif's family got the money to buy the assets.
Opposition leader Khan first called for an investigation into Sharif, whom his party has accused of corruption.
Initially, Sharif and his ruling party rejected calls for a commission into the Panama Papers allegations, but after massive protests across the country, the panel was formed. Sharif and his family have denied any wrongdoing.