Capt. James Yee had been the target of an investigation of suspected espionage at the Guantanamo Bay detention camp in Cuba, where the military is holding suspected Islamic terrorists.
But Yee was ultimately prosecuted on far less serious charges, which were thrown out last month.
Yee went on to contest the reprimand, and Gen. James T. Hill, commander of the U.S. Southern Command, ruled in his favor Wednesday. Hill decided that the punishment will not go on Yee's military record.
"While I believe that Chaplain Yee's misconduct was wrong, I do not believe, given the extreme notoriety of his case in the news media, that further stigmatizing Chaplain Yee would serve a just and fair purpose," Hill said.
Yee's attorney called the dismissal a "bittersweet victory."
"It wouldn't have killed them to admit a mistake," Eugene Fidell said. "Chaplain Yee spent 76 days in pretrial confinement for no good reason. The Army has to be big enough to admit a mistake. In that regard, today was disappointing."
Although the charges against Yee have been dismissed, Fidell said the case isn't over, suggesting his client may take legal action against the government.
Authorities had said Yee, 35, was carrying classified information when he was arrested Sept. 10., and had taken secret materials to a housing unit at the prison while serving as chaplain. Yee's attorney argued that the information wasn't classified.
The government failed to build a capital espionage case against him. He was eventually charged with mishandling classified material, failing to obey an order, making a false official statement, adultery and conduct unbecoming an officer. He could have faced 14 years if convicted.
But Army officials dismissed all criminal charges last month, saying national security concerns prevented them from seeking a court-martial in open court.
Yee was then found guilty of the non-criminal violations of adultery and downloading porn onto his Army computer.
Yee, of Chinese descent, converted to Islam from Christianity in 1991 after his military studies at West Point. He left the Army for Syria where he received religious training. He rejoined the U.S. military soon after.
Yee has returned to his home base of Fort Lewis, Wash., and resumed his duties as chaplain.