The NPR board of directors concluded, following an internal review, that Williams' termination did not violate the terms of his contract.
But the board expressed "concern" over CEO Vivian Schiller's role in the incident and opted not to give her a year-end bonus, according to a statement released by NPR. The network's ombudsman had previously said the firing was "poorly handled."
The non-profit news organization, which is supported by financial contributions from listeners and local stations and by federal subsidies, also announced that Ellen Weiss, senior vice president for news, had resigned, but did not provide further explanation.
Williams was fired in November after saying during an appearance on Fox News Channel that seeing Muslims on planes make him "nervous."
His ouster stirred a backlash across the political spectrum, with liberals, conservatives and veteran journalists chastising NPR for his dismissal. Some lawmakers have even called for Congress to cut off federal funding for NPR.
Williams, who now works full-time for Fox News Channel, told ABC News after his firing that he believed it was "vindictive" and the result of a personal and politically motivated vendetta.
NPR said William's comment conflicted with its commitment to unbiased reporting.
Williams declined to participate in NPR's internal review of the incident, according to the statement. The board also mandated a review of the organization's ethics code and management procedures for disciplinary action.
Williams, who was paid to give news analysis, contends he had long been in the crosshairs of NPR managers, who were upset that he also worked for right-leaning Fox News.
He had previously tangled with NPR management. In one case he made comments comparing Michelle Obama to Stokely Carmichael. In another, he criticized his bosses publicly when they stood in the way of an interview with President George W. Bush.
"There have been several instances over the last couple of years where we have felt Juan has stepped over the line....This isn't a case of one strike and you're out," Schiller told the Atlanta Journal Constitution following the dismissal.
Williams hasn't apologized for his remarks about being nervous seeing Muslims on planes, insisting instead they were part of a longer conversation his NPR bosses took out of context. Williams said he was making a point about how one individual's fears should not trump the civil rights of other people.
"I see people in Muslim garb, who are first and foremost identifying themselves as Muslims, in the aftermath of 9/11, I'm taken aback," he said during an appearance on "Good Morning America."
"I have a moment of fear. It's visceral. It's a feeling. I don't say I'm not getting on the plane. I don't think you must go through additional security. I don't say I want to discriminate against these people. No such thing occurs. To me, it was admitting that I had this notion, this feeling," he said.
ABC News' Russell Goldman contributed to this report.