Prosecutors have rejected a complaint from a church in the Dutch city of Tilburg after two actors were filmed having sex in the confessional box.
The video was posted on a Dutch porn website earlier this year.
Dutch authorities said the pornographic film was offensive but there was no longer a law in the Netherlands against blasphemy.
The priest at Saint Joseph's Catholic Church, Fr Jan van Noorwegen, said he was unhappy with their decision.
Another church official complained that there was something deeply wrong with the legal system.
The film appeared on Dutch porn star Kim Holland's website in January. She apologised and said the video had been made by an external producer and would no longer appear on her site, according to local broadcaster Omroep Brabant.
Fr Van Noorwegen then held a Sunday Mass seeking forgiveness for the desecration of his church. The church authorities took the case to the public prosecutor, which has now explained its decision not to take the matter further.
"We find it offensive and disrespectful, but we had a good look at the legal code and do not really see a criminal offence. Blasphemy is not a crime and there's no question here of anyone trespassing," said a spokesperson.
It is now up to the church to decide whether to take out a civil case over the video. While that is unlikely, one senior official at the church, Harrie de Swart, was astounded by the prosecutor's decision, arguing that the film-makers would clearly have had to climb over a fence to reach the confessional box.
"The justice ministry said we should have hung a no-entry sign on the church entrance. Then we could prosecute people who do this sort of thing. But it's absurd to stick that sort of sign on the door of a church," he told Omroep Brabant.
Fr Van Noorwegen was also worried about a precedent being set. "Just imagine, if it happens now in a church, a town hall or restaurant, clearly it can happen anywhere," he was quoted as saying.