'The warrant on Mr Karr has been dropped by the district attorney,' Karr's lawyer Seth Temin said outside the jail where Karr was being held. 'They are not proceeding with this case.'
Later, District Attorney Mary Lacy said that authorities had discovered no evidence to link Karr to the infamous crime.
'Because no evidence has developed, other than his own repeated admissions, to place Mr Karr at the scene of the crime, and in particular because his DNA does not match that found in the victim's blood in her underwear, the people would not be able to establish that Mr Karr committed this crime,' she said in an official court filing to quash the arrest warrant.
Temin suggested that the intense media interest around the case had prompted prosecutors to act hastily.
'We are deeply distressed by the fact that they took this man and dragged him here from Thailand, with no forensic evidence concerning the allegations against him and no independent factors leading to a presumption that he did anything wrong,' he said.
Although Karr was freed on the murder charges, he remained in the Boulder County jail to await extradition to California, where he has been wanted for alleged possession of child pornography since 2001, when he fled the US to Asia.
The dramatic developments in the closely watched case came just hours after a Denver TV station reported that Karr's DNA samples did not match the unidentified DNA found in Ramsey's underwear on the scene.
In court papers, Lacy said that Karr claimed to have killed Ramsey during sex and then tasted her blood. But officials at the Denver crime lab conducted DNA tests Friday, and Ramsay's DNA failed to match the evidence.
Karr arrived Thursday in Boulder, Colorado after he gave himself up to police a week earlier in Thailand and confessed to involvement in the killing of 6-year-old Ramsey. Karr told reporters that he was with Ramsey when she died, but that her death was an accident.
Family members claimed that Karr was with them in Georgia or Alabama when the slaying took place in Boulder, and legal experts pointed to other inconsistencies in his confession.
His arrest last week in Thailand sparked a firestorm of media attention, reflecting the celebrated nature of the December 1996 murder. The story garnered national news coverage for years, as police failed to apprehend any suspect and a cloud of suspicion enveloped JonBenet's parents.
Karr had worked for years as a primary-school teacher and began working abroad after he left the US in 2001 after being charged with possession of child pornography.
The suspect had entered Thailand five times since October. He had been sacked after a fortnight's test teaching at one Bangkok school for being 'too strict' and 'strange,' according to administrators at the school. Karr had just found a new teaching job before his arrest.
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