In a rare five-page explanation of their ruling seen by AFP, the investigators acknowledged that the chlordecone pesticide had caused a "health scandal" and inflicted long-term harm on the islands and their people.
But, as 30 years have passed, they said it was impossible to gather the evidence to prosecute anyone involved.
Almost 90 percent of people in Martinique and Guadeloupe, French territories in the Caribbean, have been contaminated with chlordecone, a December report by France's ANSES health agency found.
Used to protect crops against weevils, the pesticide was banned in the rest of France in 1990 but allowed on the islands' banana plantations until 1993.
The chemical has been linked to prostate cancer -- the rate of which in Martinique and Guadeloupe is among the highest in the world -- as well as stomach and pancreatic cancer.
Since the first criminal complaints by Antilleans over chlordecone in 2006, residents and elected officials have feared that statutes of limitations or other legal constraints would prevent anyone being held accountable.
Harry Durimel, mayor of Pointe-a-Pitre in Guadeloupe and a lawyer representing chlordecone victims, said on Friday that he would appeal the decision, taking it to European courts if needed.
"A state with the rule of law cannot say there is no grounds for prosecution faced with such a grave injustice," he told AFP.
The president of Martinique's governing body, Serge Letchimy, said in a statement that he would organize a meeting of elected officials on Friday.
The judges said their investigation had established "antisocial behaviour by some economic actors" as well as "imprudence, negligence and ignorance" by authorities.
Before 1993, "economic productivity took precedence over health and environmental concerns," they added.
But they could not prove that those involved knew the full risks, based on scientific information available at the time.
Nevertheless, they encouraged plaintiffs to use the links shown between the pesticide and its harms in their ruling to turn to "other authorities" for redress.
Prostate cancer caused by chlordecone has been recognized in the Antilles as a work-related illness since December 2021, opening the possibility of compensation for agricultural laborers.
Protests over the pesticide scandal have been mounting in Martinique again since prosecutors' November recommendation to drop the criminal case.
In February 2021, thousands of people marched through the island's capital Fort-de-France to protest against the case running into the statute of limitations.