The accountancy watchdog launched a probe into McIlwee in December 2014 but has concluded that there is "no realistic chance" a tribunal would make an adverse finding in relation to his conduct.
The investigation into the roles of PwC and various members of the accountancy profession involved in the preparation, approval and audit of Tesco’s accounts is ongoing.
The British supermarket giant was engulfed in scandal in October 2014 when it revealed it had overstated its profits by a quarter of a billion pounds. It suspended four senior members of staff and called in Deloitte to investigate.
The subsequent investigation found its accounting irregularities were worse than first feared. It revealed that Tesco had overstated its profits by £263m for at least two years, not six months as was previously thought, and by £13m more than the initial estimate.
The issue related to when payments received from suppliers who pay to run in-store promotions on their behalf are booked.
In April last year Tesco posted the biggest ever loss by a UK retailer - £6.38bn in the year to the end of February.
The Serious Fraud Office investigation into Tesco, which is also ongoing, is expected to be concluded this year.