FIFA said its disciplinary committee closed the proceedings in the claim that Ecuador defender Byron Castillo, who played in eight qualifying games, was ineligible.
Chile's football federation claimed to have documents proving Castillo is actually Colombian. It claimed the Barcelona of Guayaquil fullback used a false passport and birth certificate.
Ecuador risked forfeiting all eight games as 3-0 losses and dropping from fourth place in the South American qualifying group that ended in March. Chile would have risen to fourth in the standings.
"After analyzing the submissions of all parties concerned and considering all elements brought before it, the FIFA disciplinary committee has decided to close the proceedings initiated against the [Ecuador football federation],'' FIFA said in a statement.
"Today sporting justice has been done," FEF president Francisco Egas wrote on Twitter. "We always knew we were on the right side, let's go Ecuador!"
Egas also attached the letter from FIFA which said the Disciplinary Committee had dismissed the charges and closed the disciplinary procedure initiated against the FEF.
Chile finished seventh in qualifying with 19 points.
However, the Chilean FA's lawyer Eduardo Carlezzo had said that if Chile were given the points from the two games against Ecuador in which Castillo played they would have gone to the World Cup in their place.
"We celebrate it more because we felt humiliated, we felt trampled by the great media campaign from the Chilean federation," Egas said later at a news conference.
"Especially their lawyer, who put forward a version that doubted the actions of the Ecuadorian soccer federation and also doubted the actions of our authorities."
ANFP president Pablo Milad said they would appeal and even take the case to the Court of Arbitration for Sport (CAS) if required.
"We are losing 1-0, but there is still the second half," Milad said at a news conference with Carlezzo.
"The FIFA ruling surprisingly did not favour us despite strong evidence. We will wait for the arguments and we will appeal to FIFA. If it does not favour us, we will go to CAS."
Information from Reuters was included in this report.