Araibi was released earlier in the day from prison in Bangkok after nearly 80 days in detention and was on his way back to Australia, putting an end to the case that caused an international outcry.
"The Kingdom of Bahrain reaffirms its right to pursue all necessary legal actions against Mr. Al Araibi," the foreign ministry said in a statement, issued by the state-run news agency BNA.
Chatchom Akapin, director general of International Affairs, told EFE that Bahrain had contacted the Thai Ministry of Foreign Affairs to say it was withdrawing its extradition request for 25-year-old Araibi.
The Criminal Court accepted the petition at 3pm local time, Chatchom added.
The former Bahraini national football player fled Bahrain to Australia in 2014 after he was tried in absentia and sentenced to 10 years in prison on charges of vandalising a police station during Arab uprising protests, which he denies.
Araibi traveled to Bangkok along with his wife to spend their honeymoon on November 27 and was detained upon his arrival following an erroneous Interpol red notice was issued.
Although the red notice was later withdrawn, Bahrain requested his extradition to face his vandalism charges.
Araibi is a recognised refugee with Australian residency and fears for his life if he were to be returned to his homeland, where he claimed he was tortured in 2012.
Australia had repeatedly demanded Araibi's return, but Thailand insisted his case had to go through the required judicial process.
Araibi's case sparked attention and widespread condemnation from governments, rights groups and the international sporting community since his detention.
Former Australian football captain Craig Foster, who has been petitioning the international sporting community for Araibi's release, said on Twitter the most important thing now was his wellbeing.
"Sure Embassy staff will take care of him, there will be tears there tonight, as there are in our household right now," Foster said on Twitter.
Last month, Araibi's wife had issued an emotional plea in a letter to the Thai Prime Minister Prayut Chan-ocha to release her husband.
"His future lies in your hands_ Please save my husband," she said.
Araibi was released earlier in the day from prison in Bangkok after nearly 80 days in detention and was on his way back to Australia.