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.
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.”
The plane carrying Mr Habyarimana was shot down by a missile in April 1994, triggering the Rwandan genocide in which more than 800,000 Tutsis and moderate Hutus died.
Mr 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.
In 2006 French judge Jean-Louis Bruguière alleged that Mr Kagame – who then led the RPF rebels – had ordered the attack. Mr Bruguière issued arrest warrants against several of his aides.
The investigation was a major source of tension between France and Rwanda. President Kagame described it as a politically motivated and accused France – which supported the former Hutu regime – of having played a direct role in 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 could 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.
- 1994: France sends troops to Rwanda as part of UN-led mission; Rwanda later accuses France of protecting genocide suspects
- 2006: French judge accuses Tutsis including President Paul Kagame of the 1994 Habyarimana killing; Rwanda breaks diplomatic ties
- 2009: Rwanda joins Commonwealth; restores diplomatic ties with France
- 2010: French President Nicolas Sarkozy visits Rwanda, admits France made mistakes in 1994
- 2011: Mr Kagame visits Paris, says it is time to leave history behind