However, at a briefing Monday, Department Assistant Attorney General Lanny Breuer said the Justice Department was "deeply disappointed" in the Swiss decision.
"We are deeply disappointed." Breuer said, "We thought our extradition request was completely supported by the treaty, completely supported by the facts of the law and the underlying conduct was of course very serious. We are going to review what our options are. There is no masking the fact that we are deeply disappointed by what occurred."
Switzerland's Justice Minister made the announcement early Monday morning in a news conference in Bern, Switzerland.
Swiss officials rejected the extradition request, saying the U.S. failed to provide confidential testimony about Polanski's sentencing in 1977.
But the decision, they said, was not to excuse the crime. The Justice Ministry said it took national interests into account.
Polanski, the Oscar-winning director of "Rosemary's Baby," "Chinatown" and "The Pianist," is wanted in Los Angeles for sentencing for having sex with a 13-year-old girl during a modeling shoot in 1977.
Polanski was arrested in September at a film festival in Zurich, where he was going to receive a lifetime achievement award. The director was put under house arrest two months later at his Alpine chalet.
Polanski accused authorities in L.A. of trying to extradite him for the sole purpose of "serving him on a platter to the U.S. media."
He was initially indicted in 1977 on six felony counts, including rape by use of drugs, sodomy and child molesting. He pleaded guilty to one count of sex with a 13-year-old girl. Polanski was summoned for sentencing, then fled to his native France.
The U.S. cannot appeal the decision, but Polanski is still considered a fugitive in the U.S. The warrant for his arrest remains outstanding.
Polanski could be arrested and sent back to the U.S. if he travels to another country that has an extradition deal with the U.S.