Donald McCullin, Ferguson's Municipal Court judge, ordered the withdrawal of all the arrests made in the city before December 31, 2014 and giving new court dates to defendants on Monday.
The defendants may have fines canceled or receive alternative punishments such as payment plans or community service orders.
The new judge, who is black, was appointed to his job in June following the resignation of the previous judge after a report from the US Department of Justice on the exploitation of people by the city police and courts five months ago.
“Ferguson’s police and municipal court practices both reflect and exacerbate existing racial bias, including racial stereotypes,” a US Department of Justice report said in March, 2015, after examining the working of law enforcement officials in Ferguson, Missouri.
The report also said the city police and court worked together to extract extra revenue from defendants. Many people’s cases were pending and minor violations received jail time or fines.
The new judge said he made the decision in order to restore the people of Ferguson's trust in the court.
“These changes should continue the process of restoring confidence in the Court, alleviating fears of the consequences of appearing in court and giving many residents a fresh start," he said.
He added that driving licences taken from defendants will also be returned. Previously, the city director of revenue suspended defendants' licences for not appearing in court or for not paying fines.
The Justice Department began investigating the situation in Ferguson after the fatal shooting of Michael Brown, a 18 year-old black man, in August 9, 2014 by the white police officer Darren Wilson.
The police officer was not charged and there were protests across the country against racism and mistreatment of blacks by police.