Under Indian laws, obscenity is a criminal offence.
'Expression of purity'
Mr Husain has been living in the Middle East after the rash of cases filed against him.
"The high court said the 92-year-old painter deserves to be at home, painting his canvases," said Akhil Sibal, Mr Husain's lawyer.
He said Mr Husain had said that the nudity in his painting was an "expression of purity".
In 2006, Mr Husain had publicly apologised for the painting.
He promised to withdraw the controversial painting from a charity auction, after Hindu nationalist groups accused him of hurting their religious sentiments.
The nude painting sparked off a series of obscenity cases. The cases were all transferred to the high court in Delhi after a request by Mr Husain's lawyers.
Mr Husain is one of India's leading painters.
His paintings are much sought after and are auctioned for millions of dollars.
He has also made two Bollywood films, although both failed at the box office.