Wladyslaw Szpilman, whose widow and son brought the case to the Warsaw court, inspired Roman Polanski's Oscar-winning film about a piano player who uses his music to survive the Nazis.
His family took issue with certain quotes by Polish-Jewish singer Wiera Gran in a 2010 biography of her life written by Agata Tuszynska. The remarks see Gran accusing Szpilman of being part of the Jewish Police in the Warsaw ghetto.
The popular late ghetto songstress was herself suspected of collaborating with the Nazis. A court acquitted her of the charges after the war but continued criticism forced her to leave Poland.
Ghetto survivors who knew Szpilman testified during the defamation trial, as did former foreign minister Wladyslaw Bartoszewski, who helped Jews during World War II. All rejected Gran's claims.
Judge Bozena Lasota said the author herself had expressed doubts over the allegations against Szpilman and "never shared Wiera Gran's most serious view".
A biographer has the right to quote various opinions, Lasota said, adding that it would be impossible to pen a biography of the recently deceased without upsetting a soul.
"I'm glad the court confirmed that historians and biographers have the right to quote their contacts," Tuszynska told reporters after the verdict.
"I believe that we do in fact have freedom of speech."
Szpilman's widow and son, who did not attend the ruling, had brought the case against Tuszynska and her publisher.
The Szpilman's lawyer Dawid Biernat said his clients would appeal.
The trial was closely followed in Poland where Szpilman died in 2000. He gained world renown after the Polish-French Polanski adapted the musician's memoirs for film.
"The Pianist" won three Oscars in 2003, including a best actor award for US actor Adrien Brody as Szpilman.