Nafissatou Diallo, a 33-year-old West African maid, had claimed the 62-year-old sexually assaulted her in May at a Manhattan hotel where she worked as a maid.
However, due to doubts over Diallo's credibility and lack of evidence, prosecutors filed papers to drop the charges.
Prosecutors argued that DNA evidence showed sexual contact but not necessarily a forced encounter. They also see medical findings as inconclusive.
Strauss-Kahn was greeted by protesters wielding signs carrying such messages as "DSK treats women like property" and "Put the rapist on trial - not the victim." Even inside the courtroom, shouting could be heard.
He appeared resolute in the courtroom, smiling and shaking hands with an audience member and his wife, journalist Anne Sinclair, sitting nearby. They left court without speaking to reporters but read a statement shortly afterward.
"These past two and a half months have been a nightmare for me and my family," he said. "I want to thank all the friends in France and in the United States who have believed in my innocence, and to the thousands of people who sent us their support personally and in writing. I am most deeply grateful to my wife and family who have gone through this ordeal with me."
The Associated Press contributed to this report.