The decision, announced by the court on Thursday, came a day after French President Emmanuel Macron met Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly in New York.
It was not clear why the case was withdrawn or whether it augured progress toward a deal.
The ICJ case, filed in May, accused Iran of violating consular rights of Cécile Kohler and Jacques Paris under the Vienna Convention and subjecting the detainees to torture-like conditions in Tehran’s Evin prison.
France labeled the arrests as "hostage diplomacy," with Kohler and Paris, a teacher and her partner, accused of spying for Israel’s Mossad.
They were detained in May 2022, and Iranian state TV aired a confession from the pair in October of that year.
Human rights groups have accused Iran for systematically extracting confession by force. Tehran denies political motives behind the detentions.
Iran seeks the release of Iranian national Mahdieh Esfandiari, who has been held in Fresnes prison near Paris since March on charges of glorifying terrorism.
During their meeting on Wednesday, Macron said he pressed Pezeshkian for the release of Kohler, Paris and a third French national Lennart Monterlos, as well as compliance with Western demands for greater transparency on its nuclear program.
Pezeshkian, posting on X, expressed optimism about resolving tensions.
The last prisoner swap between Iran and a European country came when Italy freed an Iranian national wanted by the United States for allegedly supplying Tehran with drone technology in exchange for an accredited Italian journalist arrested in Iran.