Kenyatta, Kenya's new president, after witnesses said they accepted bribes before giving evidence or were too scared to testify.Francis Muthaura, former head of Kenya's civil service, had been accused alongside Mr Kenyatta of arranging armed militia to launch attacks on rival tribes following the country's 2007 election.
But Fatou Bensouda, chief prosecutor at the International Criminal Court's, said key witnesses had died, were too scared to give evidence against the suspects, or had recanted their testimony after admitting taking bribes.
Mr Kenyatta's case was not affected, and his trial will start in July, she said. Kenya's new president has been charged with five counts of crimes against humanity, including being "indirect co-perpetrator" of murder and rape.
His new deputy president, William Ruto, faces three similar charges. Both men deny the allegations.
Ms Bensouda stressed that the timing of her announcement, less than 48 hours after Mr Kenyatta was declared winner of Kenya's tense elections, had nothing to do with the poll results."While we are all aware of political developments in Kenya, these have no influence, at all, on the decisions that I make," she said in The Hague, where the Court sits.
"This is an exceptional decision. I did not take it lightly, but I believe it is the right thing to do."
Mr Kenyatta is likely to use the prosecutor's move to press that his case, which relies on some of the same witnesses, be dropped. Ms Bensouda said she had extra evidence against him.
But his supporters will welcome the charges being dropped against Mr Muthaura, Kenya's former cabinet secretary.
"People are already saying all of the cases will come tumbling down now," said Wesley Chirchir, a community peace activist in Eldoret, a town 200 miles north of Nairobi, which was worst hit by the 2007-08 election violence.
"Truly people here believe that their leaders should not be prosecuted for these crimes. People here know that it was not Kenyatta or Ruto who burned their houses."
Both men have promised to cooperate with the court and show up to their trials, despite the strain that that will place on their abilities to rule one of Africa's most important nations and economies.
While their trials continue, Britain and other key allies of Kenya can have no direct contact with either man aside from for "essential" matters.
Separately, a legal team assembled by Raila Odinga, who lost last week's election to Mr Kenyatta, was preparing its challenge to the results.
Mr Odinga has claimed the election was "tainted" by a series of electoral irregularities that could have had a bearing on the outcome.
Crucial data needed to prove their case was not being released by the Kenyan electoral commission, Mr Odinga's aides said, adding that they feared a "cover-up" was in progress.
