The 33-year-old, who was recently named the best player in the world by FIFA, had been accused of giving a false testimony at a trial relating to his transfer to Tottenham Hotspur in 2008.
The trial saw Dinamo Zagreb chief executive Zdravko Mamic and three club officials sentenced to prison over embezzled funds from transfers which are thought to have cost the club more than £13.1m and the state around £1.3m.
That verdict is being appealed, and the Zagreb municipal criminal court has now ruled that the perjury charge against Modric was "premature" with the initial trial still not final.
Modric is accused of signing a clause in his contract when he had already left Zagreb for Spurs in 2008, whereas he claims that he signed it in July 2004.
Prosecutors claim that the Madrid midfielder changed his testimony in favour of Mr Mamic, who has since fled to Bosnia.