Rights groups called the government action "a celebration of corruption."
The government said Thursday it dropped charges against Mohammed Abacha in a deal to allow the return of the Liechtenstein money.
Mohammed Abacha is wanted in the United States for his alleged part in laundering some $458 million in funds stolen by his father, the late Gen. Sani Abacha, and frozen by the U.S. in February.
Swiss and Nigerian advocacy groups say $250 million of corrupt proceeds already returned by Switzerland cannot be accounted for in a country steeped in corruption.
Abacha died in 1998 and is believed to have stolen up to $5 billion.