Denis Petkov, 19, was found with stab wounds following an incident on East Hanningfield Road in Rettendon, Essex, on 11 March.
Mihal Dobrev, of East Hanningfield Road, pleaded not guilty to murdering the teenager.
The Crown Prosecution Service cited insufficient evidence for its decision not to go ahead with a trial.
Jenny Hopkins, chief crown prosecutor for CPS East of England, said following a review of the case it had "concluded there is insufficient evidence for a realistic prospect of conviction against Mr Dobrev".
She added: "This decision means that the case cannot proceed and so we have offered no evidence against him."
The CPS offered its sympathies to the family of Mr Petkov.
A 37-year-old man charged with murdering a Bulgarian teenager will no longer face prosecution.