The Prosecutor said the evidence “had not improved to such an extent that Mr Kenyatta's alleged criminal responsibility can be proven beyond reasonable doubt”.
Kenyatta, the first sitting head of state to appear before the international court, was charged with crimes against humanity committed in violence that followed elections at the end of 2007.
The Prosecutor’s decision follows a court order on Wednesday denying her request for a further adjournment of the trial. It gave her one week to either withdraw the charges or say she was ready to go to trial.
The trial had already been adjourned several times at the request of the Prosecutor, who complained of witness intimidation and lack of cooperation by the Kenyan government in meeting her requests for evidence.