Mr McCarrick, who was the former archbishop of Washington, was charged with assaulting a 16-year-old boy in 1974.
The former cleric, the most senior member of the US Catholic church to face charges, still faces a criminal sexual abuse charge against the same alleged victim, in Wisconsin.
Mr McCarrick pleaded not guilty in September 2021 to allegations that he sexually abused the boy at a wedding reception at Boston’s Wellesley College in June 1974.
His lawyers told the court in April that Mr McCarrick had been examined by experts at the Johns Hopkins University School of Medicine, who concluded he suffers from dementia, likely due to Alzheimer’s disease.
The judge ruled in agreement on Wednesday and prosecutors immediately dismissed the complaint against the former Cardinal.
“(The) Commonwealth does not have a good-faith basis to proceed any longer with the prosecution give the testimony and the opinions of the psychologist that Mr McCarrick is not restorable to competency,” the prosecutor said.
Mr McCarrick, who now lives in Missouri, did not appear in person in the courtroom but joined the hearing by video.