Khashoggi -- a royal family insider turned critic -- was killed and dismembered at the kingdom´s consulate in Istanbul in October 2018, in a case that tarnished the reputation of de facto ruler Crown Prince Mohammed bin Salman.
His family´s pardon could spare the lives of five unnamed people sentenced to death over the murder in a December court ruling that exonerated two top aides to the crown prince.
"On this holy night of this blessed month (of Ramadan)... we the sons of martyr Jamal Khashoggi announce we forgive and pardon those who killed our father," the Washington Post columnist´s son Salah Khashoggi said on Twitter.
Saudi authorities did not immediately comment on the legal ramifications of the announcement from Salah, who resides in the kingdom and has denied reports of a financial settlement with the government.
"What this essentially means is that the killers will avoid capital punishment since that is a right the family (under sharia law) has to forgive," Ali Shihabi, a Saudi author and analyst close to the government said on Twitter.
"Other legal procedures by the state continue."
Analyst Nabeel Nowairah also said the family´s declaration effectively means the "murderers will not be executed".
Salah has previously said he had "full confidence" in the judicial system, and criticised opponents he said were seeking to exploit the case.
The Washington Post reported last year that Khashoggi´s children, including Salah, had received multimillion-dollar homes and were being paid thousands of dollars per month by authorities.
Salah rejected the report, denying discussing a financial settlement with the Saudi government.
Out of 11 individuals indicted in the case -- most of whom remain unnamed -- five were sentenced to death, three face jail terms totalling 24 years and the others were acquitted, according to the public prosecutor.
The December verdict, which was lambasted by rights groups as a travesty of justice, underscored Saudi efforts to draw a line under the crisis as it seeks to reboot its international image ahead of this year´s G20 summit in Riyadh.
The murder involved 15 Saudi agents sent from Riyadh, Ankara said.
Riyadh has described the murder as a "rogue" operation, but both the CIA and a United Nations special envoy have directly linked Prince Mohammed to the killing, a charge the kingdom vehemently denies.
Khashoggi, a 59-year-old critic of the crown prince, was strangled and his body cut into pieces by a 15-man Saudi squad inside the consulate, according to Turkish officials. His remains have not been found.
Saudi prosecutors had said deputy intelligence chief Ahmed al-Assiri oversaw Khashoggi´s killing and the US Treasury had claimed the royal court´s media czar Saud al-Qahtani was "part of the planning and execution" of the operation that led to the murder.
Qahtani was investigated but not indicted "due to insufficient evidence" and Assiri was charged, but eventually acquitted on the same grounds, according to the public prosecutor.
Both aides were part of Prince Mohammed´s tight-knit inner circle and were formally sacked over the killing, but only Assiri appeared in the court hearings, according to Western sources.
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