Prosecutor said his film "Fitna," or "Ordeal" in Arabic, and statements Wilders wrote in Dutch newspapers were hurtful and insulting but not criminal.

The film juxtaposed Quranic verses against a background of violent film clips and images of terrorism by Islamic radicals. It aroused protests around the Muslim world after it was released on the Internet in March.

Wilders also was investigated for remarks published in the newspaper De Volkskrant calling the Quran fascist.

"I've had enough of Islam in the Netherlands; let not one more Muslim immigrate," he wrote in the paper. "I've had enough of the Quran in the Netherlands: Forbid that fascist book."

Prosecution spokeswoman Hanneke Festen said Wilders' statements were allowable under Dutch law, which forbids inciting hatred against groups on the basis of their race or creed but also grants leeway to freedom of speech.

"We came to the conclusion that (Wilders' statements) may be hurtful and painful for Muslims but they were made in the context of a debate in society," she said.

"That doesn't mean you can say anything, but you have to really cross a line and be unnecessarily hurtful and insulting and not add anything" to the national debate in order for prosecutors to act, she said.

Wilders told The Associated Press he was not surprised by the decision because he had stayed within the boundaries of Dutch law.

Wilders said that in the months since his film attacking radical Islam was broadcast on the Internet, he had received reactions from all over the world. "Most were very negative, but some were very positive," he said.

Mohamed Rabbae, chairman of the moderate National Moroccan Council, said the Dutch group will go to court to ask a judge to order a prosecution of Wilders anyway.

"My reaction is one of disappointment and divergence with the point of view of the prosecutor," he said.

Rabbae said the prosecutors had decided that Wilders' position did not amount to discrimination against Muslims, but that it criticized Islam.

"Islam is a big part of the identity of Muslims, so if you attack Islam it is for us the same as attacking and discriminating against Muslims," he said.

Wilders said he hopes prosecutors will send a copy of their decision to prosecutors in Jordan, where he faces a lawsuit. Wilders has said he is worried he could be arrested if he leaves the Netherlands because Jordan has informed Interpol he is wanted to face charges there.

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Associated Press writer Mike Corder contributed to this story from The Hague.