"The court, therefore, does not find it proportional to detain Julian Assange," said the judges said in a statement.
A Swedish court on Monday said it considers Julian Assange a suspect in a 2010 rape case but rejected a request to detain him, dashing the prosecutor's hopes of having him swiftly extradited from Britain.
The Uppsala district court said that the fact that Assange was currently in prison in Britain meant he did not need to be formally detained in Sweden to be questioned by Swedish prosecutors.
"As Julian Assange is currently serving a prison sentence, the investigation can proceed with the help of a European investigation order, which does not require Julian Assange's detention (in Sweden)," the statement read.
Swedish deputy director of public prosecutions Eva-Marie Persson had argued that the 47-year-old co-founder of WikiLeaks had not cooperated with the Swedish investigation previously, fleeing from an extradition order, and therefore needed to be detained and questioned in Sweden.
The Australian whistleblower is currently fighting extradition to the U.S. after Ecuador revoked his seven-year asylum in the country's London embassy back in April. He was arrested on April 11 by British police.
He is now serving a 50-week sentence in a London jail for skipping bail when he fled to the Ecuadorean embassy in 2012.