The 22-year-old was accused of making racist remarks by Real Madrid during the controversial first leg of their European semi-final last month.
The capital club published a video on their website ahead of the second leg, with a subtitle alleging Busquets had made a comment towards wing-back Marcelo during Barca's 2-0 win at the Bernabeu.
UEFA announced last week they had opened disciplinary proceedings against Busquets, with the case being dealt with over the weekend.
And a short statement on Barca's official website on Monday confirmed the midfielder has been cleared of any wrongdoing.
"Sergio Busquets will play in the Champions League final," said the statement.
"UEFA has notified FC Barcelona they have dismissed the claims of Real Madrid."
The footage on Madrid's website was posted the day before the second leg, which finished in a 1-1 draw to send Pep Guardiola's side through to the final 3-1 on aggregate.
It showed Busquets appearing to direct a comment at Marcelo while covering his mouth with his hands, with Madrid alleging the player said "mono, mono" - Spanish for "monkey, monkey".
The incident was one of several in an ill-tempered tie between the two Primera Division giants, with both clubs lodging complaints to UEFA after the first leg.
Madrid were unhappy with the behaviour of the opposing players and the red card shown to Pepe, while Barca protested over Madrid coach Jose Mourinho's post-match comments alluding to favours from UEFA in big Champions League games and questioning the Catalan club's relationship with the European governing body.
The complaints were dismissed by UEFA, with Mourinho later handed a five-game European ban for his outbursts.
Barca will take on Manchester United in the final at Wembley on May 28.