"The investigation is terminated," the ITC said in a notice announcing it was rejecting a Motorola Mobility patent complaint dating back to late 2010.
Motorola Mobility had argued that Xbox 360 consoles infringed on patent technology for wirelessly transmitting data.
If the ITC had sided with Motorola Mobility, which was acquired by Google in a $12.5 billion deal in 2012, it could have resulted in a ban on importing Xbox 360 consoles, which are manufactured in China.
"This is a win for Xbox customers and confirms our view that Google had no grounds to block our products," Microsoft said in a statement.
Motorola Mobility countered that it was "disappointed" with the ITC decision and would explore its options.
Xbox consoles are at the heart of Microsoft's push to lay claim to Internet Age living rooms.
On Tuesday, Microsoft unveiled a new-generation Xbox One console touted as a home entertainment hub that goes far beyond games.
The beefed-up hardware is powered by software that allows for instant switching between games, television, and Internet browsing. Microsoft-owned Skype was also integrated for online group video calls.
Kinect motion and sound-sensing accessories accompanying the consoles recognize users, respond instantly to commands spoken in natural language and even detect a person's pulse.
Xbox One consoles are set to hit the market later this year.
"This is the beginning of a new generation of games and entertainment and a new generation of smart TV," Microsoft entertainment unit executive Yusuf Mehdi said during an event at the technology giant's headquarters in the northwestern state of Washington.