The move removes the final possible hurdle to Zardari standing for prime minister.
Musharraf amnesty
The case related to a BMW car which Zardari had allegedly imported without paying duty.
All the cases have been withdrawn as part of an amnesty given by Pervez Musharraf, the president, last October, which allowed Bhutto to return from exile in an apparent prelude to a power-sharing deal between the two.
Bhutto was assassinated at an election rally in Rawalpindi on December 27 and Zardari took over the de facto leadership of her Pakistan People's Party (PPP), leading it to victory in elections on February 18.
Zardari spent eight years in prison on various corruption charges dating from Bhutto's spells as prime minister from 1988-1990 and 1993-1996.
Coalition government 
He was released on bail in late 2004 and was never convicted. Bhutto fled Pakistan in 1999 for self-imposed exile in London and Dubai because of the corruption cases but always maintained that they were politically motivated.
The PPP is now forming a coalition government with the party of former prime minister Nawaz Sharif - the man ousted by Musharraf in 1999 - after they trounced the president's allies in February 18 national polls.
PPP insiders say Zardari, who did not contest the parliamentary polls, is now eyeing the prime minister's slot after the party failed to agree on a candidate.
Any criminal conviction would have stopped him from contesting by-elections which are due in May.