Northumbria Police says PC Katie Barratt, who admitted branding takeaway staff p****, "didn't meet the threshold" for a criminal investigation.
The officer, sacked for her racist outburst, won her job back on Monday - while being awarded at least £15,000 in backpay.
An appeal panel gave her the green light to resume her career with Northumbria Police, even though the force tried blocking her returning.
Shocked colleagues reported her to bosses after watching her say "I wish these f****** p**** would hurry up with my pizza" inside the Spice of Punjab on on Westmorland Road following a boozy Christmas staff party.
While she faced an internal probe, a force spokesperson confirmed PC Barratt was never arrested or interviewed under caution over the outburst which even her own barrister admitted was an "abomination".
The misconduct hearings heard she didn't directly abuse the staff although it was only down to "luck" they didn't hear.
It is understood that, for the criminal threshold to be met, comments have to cause alarm, distress or harrassment.
PC Barratt, who comes from a police family, wiped away tears of joy as an appeal panel ruled that the initial decision to sack her was too harsh.
Over 20 character references were submitted on behalf of the PC, who insists "there's no deep, meaningful racism in me".
Her barrister, Guy Ladenburg, accepted her slurs were an "abomination" but claimed she'd since curbed her drinking.
And he said she felt that she shouldn't have been sacked "because it is not the worst kind of racism".
But questions will be asked over how a police officer - who admitted using a racial slur - can expect to work in an area as culturally diverse as Tyneside.
And addressing the misconduct ruling, the North East branch of Stand Up To Racism said: "It seems the ‘careers’ of individual police officers are more important than the safety and well-being of the communities they are supposed to serve and protect."
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