The case was withdrawn because of insufficient evidence, said National Prosecuting Authority spokesperson Monica Nyuswa.
The men have only been charged with breaching South Africa’s immigration laws and will be deported to their home country.
The Home Affairs department said in a statement it would ensure “the deportations are conducted swiftly”.
One of the men’s lawyers, Nico du Plessis, told Associated Press the group was “happy” the charges had been dropped.
The group is expected to be deported to Libya’s second city, Benghazi.
Since the ousting and killing of Libyan leader Muammar Gaddafi in 2011, the country has suffered from chronic insecurity.
The group were arrested in July after South African police raided a farm in White River – a small town in the northern province of Mpumalanga.
At the time of the arrest, a police spokesperson said the group had “misrepresented themselves” on their visa applications by saying they would be training as security guards.
Licenced firearms and military tents were allegedly found at the camp, along with cocaine and cannabis.
The camp was initially registered as a training site for a private security company but it appears to have been converted, a second police spokesperson, Donald Mdhluli, was quoted as saying by the AFP news agency.
Mr Mdhluli said the owner of the security company was a South African national and that the police were investigating if he had permission to run the site as a military-style camp.
Although the men will be deported, there will still be an investigation into the owners of the farm.
