After a two-hour hearing in Bristol, the three-man panel declared they were "not satisfied" that Tuilagi should have been penalised for a tip-tackle on Danny Care during the Aviva Premiership final between Leicester and Harlequins on Saturday.
An RFU statement said: "A citing charge brought against Manusamoa Tuilagi of Leicester Tigers was tonight dismissed."
It continued: "An RFU disciplinary panel of Christopher Quinlan QC (chair), Dan White and Nick Dark was not satisfied on the balance of probabilities that the referee was wrong in not sending the player off for a tackle on Harlequins' Danny Care during the Aviva Premiership final between the teams on May 26.
"Tuilagi is therefore free to continue playing and will fly out to South Africa with the England squad tomorrow evening."
The news comes as a boost to England boss Stuart Lancaster, who saw Toby Flood come through a training session after fears he could be ruled out through injury.
Forward Matt Stevens, however, has been ruled out of the tour with a shoulder injury.