Prosecutors dropped the charge Monday with little explanation.
"While the charge against Bailey was brought in good faith based on witness accounts and identifications, additional information has developed during the ongoing investigation that warranted dismissal of the murder charge against Bailey at this time," the state's attorney's office in Cook County said in a statement.
A spokeswoman for the office declined to elaborate, saying the investigation is ongoing.
Bailey spoke to reporters briefly as he left the Cook County Jail on Monday evening, thanking Jesus for his release and expressing remorse for missing Albert's funeral while he was in custody.
"I just want to give a shout-out to Derrion's family, his mother and grandmother," he said. "And I'm sorry I couldn't attend his funeral. He was a good friend of mine."
A woman who answered the phone at Bailey's home number hung up when contacted Monday for comment.
Bailey's family has maintained his innocence, saying the Fenger senior wasn't at the fatal fight and police misidentified him in the video.
Three other teens still face charges in the melee: Silvonus Shannon, 19; Eugene Riley, 18; and Eric Carson, 16. All are being held without bail. Their next court date is Friday.
A cell phone video shows a group of people striking Albert with boards and kicking him as he lay on a sidewalk. Albert, who was a sophomore at Fenger, has been described by police as an innocent bystander caught up in the fight.
Albert's death and the disturbing footage of the beating quickly attracted the attention of President Barack Obama, who sent Attorney General Eric Holder and Education Secretary Arne Duncan to the city to meet with Fenger students, parents and administrators. Duncan, the former chief of Chicago Public Schools, said Fenger would receive an emergency grant of about $500,000 for counselors or other programs.
Federal officials also promised support for efforts nationwide to fight youth violence.
In Chicago, Mayor Richard Daley has introduced plans to add more police officers at schools and funding for after-school programs.