There is insufficient evidence to charge Stevens, Prosecutor Norm Maleng said.
The woman who filed the complaint was drunk and unable to recall events of the evening, and witnesses could not corroborate her claim that she was raped, Maleng said.
Maleng did not offer a public apology to Stevens.
"I am relieved that this matter has been resolved and I can continue to focus on being a student at Washington and a member of the football team," Stevens said in a statement released by the school.
"It has been a difficult time for everyone involved," said Huskies coach Rick Neuheisel. "I'm glad this has been resolved. My general feeling is one of relief."
'Just Not Enough Evidence'
Prosecutor spokesman Dan Donohoe referred questions about the handling of Stevens' July 27 arrest to police.
Asked whether the arrest was premature, police spokeswoman Pam McCammon said: "No, not at all. The investigation was done very well and was very thorough. There's just not enough evidence to go ahead and charge."
Stevens, 6-foot-7 and 250 pounds, is entering his third year at Washington. He redshirted his first year and last season caught 21 passes for 265 yards and four touchdowns.
In June 1998, Stevens was charged with two counts of assault after a fight near Olympia, about 60 miles south of Seattle. Stevens was a star quarterback at Olympia's River Ridge High School.
He and a friend initially were accused of hitting a man with a baseball bat and kicking him in the face, breaking his jaw. Stevens was allowed to attend training camp only after a judge signed an order releasing him from house arrest.
Stevens eventually pleaded guilty to misdemeanor fourth-degree assault for kicking the man. Prosecutors determined he had not acted as an accomplice of his friend, who was convicted of a more serious charge in the bat assault.
Also in 1998, Stevens spent three weeks in jail after a drug test administered under terms of his house arrest turned up THC, the active ingredient in marijuana.