MacArthur and the other Allied higher-ups made the calculated decision that keeping the emperor system would be best for Japan's stability moving forward -- MacArthur stated in a telegram to Truman,
"His indictment will unquestionably cause a tremendous convulsion among the Japanese people, the repercussions of which cannot be overestimated. He is a symbol which unites all Japanese. Destroy him and the nation will disintegrate."
How did this happen? Turn of the century historiography argues that an intelligence officer, Brig. Gen. Bonner Fellers, had a huge role in making it possible. A scholar of Japanese culture, Fellers wrote several memos to MacArthur underlining the centrality of the Emperor in Japanese culture and recommended,
"If the Emperor were tried for war crimes the governmental structure would collapse and a general uprising would be inevitable...There would be chaos and bloodshed."
After MacArthur agreed that the Emperor should not face charges (and informed the President in the above telegram), Fellers met with the indicted Class A war criminals (Hirohito was not indicted) that were to face trial, and helped them to coordinate their testimonies to make it seem as if Hirohito had not been involved in the decision making of the Japanese war machine. Because of this public, official absolution of any guilt, he was saved from punishment or even death.
SOURCES: Dower, John. Embracing Defeat (1999)
Bix, Herbert. Hirohito and the Making of Modern Japan (2001)