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."
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."
Representatives of Apple in France would not comment on the decision, nor did a lawyer for Apple at the hearing, Coline Warin.
The app let users consult a database of celebrities and public figures to see if they are Jewish or not. 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.
The app remained available outside France, however, selling for $1.99 through Cupertino, California-based Apple's US 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.
Apple has removed numerous apps from the App Store since it launched in mid-2008 for violating the myriad restrictions it imposes on developers.