His death in 1994 was a trigger of the genocide.
A French inquiry began four years later at the request of relatives of the French crew members who died.
A judge accused Tutsi rebels, led by the current president, Paul Kagame, of the attack; arrest warrants were issued for a number of people close to him.
The charges were dropped on 21 December, a judicial source said on Wednesday.
French prosecutors had recommended in October the charges be dismissed because of insufficient evidence against the suspects.
Rwanda: How the genocide happened
Rwanda: 100 days of slaughter
Lawyers for Habyarimana’s widow, Agathe, have told the AFP news agency the plaintiffs in the case would appeal against the decision.
“We have to interpret this decision by French judges as a form of resignation faced with a political context which prosecutors did not know how to fight,” lawyer Philippe Meilhac said. “Rwandan authorities have never sought to help bring the truth to light.”
Habyarimana – a Hutu who had signed a peace deal with Tutsi rebels – was flying into the capital, Kigali, with his Burundian counterpart Cyprien Ntaryamira when a missile brought the plane down, killing all on board.
The enquiry was launched in 1998, at the request of relatives of the pilot, who was French. The probe was a major source of tension between France and Rwanda.
It was initially conducted by a prominent judge, Jean-Louis Bruguière, who concluded that Mr Kagame – who led the RPF rebels in 1994 – had ordered the attack. In 2006, Mr Bruguière issued arrest warrants against several aides of President Kagame.
The Rwandan government described the enquiry as a politically motivated and accused France – which had supported the previous Hutu regime – of continuing to support those who had carried out the genocide.
Relations between the two countries later improved. In 2012, a report by the French judge who succeeded Mr Bruguière cast doubt on the idea that the rebels had shot down the plane, and suggested that Hutu extremists were likely to have been responsible.
An inquiry by Mr Kagame’s government said the missile that brought down the jet had been fired from an army camp controlled by Hutus.
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