Lawyer Stephane Lilti, representing four anti-racism associations, said the decision was "motivated by the removal of the application in all countries of the world."
"Where is the anti-Semitism in this case?," Apple's lawyer, Catherine Muyl, said during a hearing for the LICRA case on November 17, insisting that "this is not a discrimination case."
"When Johann Levy conceived his application, he was worried that it would be perceived as too 'pro-Jewish'," Muyl explained.
Lilti said at a hearing in a Paris court Thursday that the app's designer, Johann Levy, decided to remove it. Lilti said while the groups agreed to drop the lawsuit, their complaint "had beneficial effects."
For those unfamiliar with the app, it lets users consult a database of celebrities and public figures to see if they are Jewish or not.
"Listed for you, thousands of Jewish personalities (through their mother), 'half-Jewish' (through their father), or converts," the app's inventor Johann Levy promised potential buyers on the French Apple Store, according to The Register.
The app was selling for 0.79 euro cents in France, but was removed from the French online App Store after anti-racism groups initially complained about it in September. However, the app remained available outside France, however, selling for $1.99 through Cupertino, California-based Apple's U.S. App Store.
SOS Racisme, MRAP, the Union of Jewish Students of France and a group called J'accuse joined in a lawsuit against Apple, arguing that the app violated France's strict laws banning the compiling of people's personal details without their consent.
Under the French penal code, stocking personal details including race, sexuality, political leanings or religious affiliation is punishable by five-year prison sentences and fines of up to €300,000 ($411,000).
Such laws were enacted in the decades following the Holocaust, which saw some 76,000 Jews deported from Nazi-occupied France to concentration camps. Fewer than 3,000 returned alive.
In an interview published in September, app developer Levy said he developed the app to be "recreational ... as a Jew myself I know that in our community we often ask whether a such-and-such celebrity is Jewish or not," Levy was quoted as saying in the daily Le Parisien.
The International League Against Racism and anti-Semitism (LICRA) has also dropped its demand that Apple uninstall the app from all devices where it has already been installed.
Apple has removed numerous apps from the App Store since it launched in mid-2008 for violating the myriad restrictions it imposes on developers.
The Associated Press contributed to this story.