Sweden's Director of Public Prosecution has decided to discontinue the investigation against WikiLeaks founder Julian Assange.
The dramatic announcement came ahead of a press conference by the DPP, Marianne Ny, into the long running saga.
Mr Assange has been living inside the Ecuadorian Embassy in London for almost five years and has been granted political asylum.
He was questioned six months ago in the presence of Swedish officials over a sex allegation, which he has always denied.
Mr Assange faces extradition to the United States for questioning over the activities of WikiLeaks if he leaves the embassy.
A brief statement ahead of today's press conference said: "Director of Public Prosecution, Ms Marianne Ny, has today decided to discontinue the investigation regarding suspected rape (lesser degree) by Julian Assange."
Friday's development follows a letter sent to the Swedish government by the government of Ecuador saying there had been a "serious failure" by the prosecutor, including a "lack of initiative" to complete inquiries.
The letter raised developments in the United States since the election of Donald Trump as President, including a speech by CIA director Mike Pompeo describing WikiLeaks as a "hostile intelligence service".
Recent public declarations such as this constitute an "obvious risk" for Mr Assange, said the letter.
Mr Assange originally faced three sex allegations, all of which he denied.
The focus will now move to the governments of the UK and the United States.
Mr Assange was on bail when he arrived at the Ecuador embassy in Central London almost five years ago.
WikiLeaks tweeted: "UK refuses to confirm or deny whether it has already received a US extradition warrant for Julian Assange. Focus now moves to UK."