Ratchanok had been given a provisional suspension on July 13 after reports that she had failed a dope test during the Uber Cup tournament in China in May.
A hearing process by badminton's governing body began following Ratchanok's suspension.
"The Panel concluded that ... no violation of the regulations was committed," the BWF said in a statement.
Badminton's governing body lifted the suspension, allowing Ratchanok to take part in competitions with immediate effect.
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At a news conference in Bangkok on Monday, Ratchanok said she was happy to have been proven innocent.
"I didn't do anything wrong and I am confident in the decision of the BWF. I'm happy I received justice," Ratchanok told reporters.
"I will focus on training in order to bring success to the Thai people."
Ratchanok's team had said she received an injection during the China tournament in May to treat a knee injury and that could have been the reason for her sample initially testing positive.
The 21-year-old will be among Thailand's main medal hopes in Rio and one of the chief threats to China's chances of defending their sweep of all five badminton titles at the London Games.
The daughter of factory workers at a Bangkok sweet-maker, the former world champion hopes winning gold at the Rio Olympics might inspire more Thai girls to chase their dreams.
(The story was refiled to remove an incorrect reference to the second sample being sent to Japan for testing in paragraph three.)
(Writing by Amy Sawitta Lefevre; Editing by Peter Rutherford)
