Prosecutors said the poem recited by German comedian Jan Boehmermann was so exaggerated it could not be taken seriously.
German prosecutors on Tuesday halted an investigation into a comedian for insulting Turkish President Tayyip Erdogan, saying his defamatory poem was so exaggerated and could not be taken seriously.
During a broadcast on state television in March, German comedian Jan Boehmermann recited a poem accusing Erdogan of bestiality and paedophilia.
He admitted that it flouted Germany's legal limits to free speech and was intended as a provocation.
His poem had unleashed a bitter row between Germany and Turkey, prompting Erdogan to file a criminal complaint.
Chancellor Angela Merkel in April authorised the investigation into whether the comic could be convicted under rarely enforced lese majeste legislation.
Under Germany's criminal code, insults against foreign leaders are not permitted. However, the cabinet has to approve a criminal inquiry.
In a statement outlining the ground for dropping the case, prosecutors said, "In view of the exaggerations... there is no evidence that the accused was making a serious attack on the personal or social reputation of the Turkish president."
"The piece was part of a well-known satirical television broadcast, and that an average TV audience should therefore assume that statements made there are often accompanied by exaggerations which often lack seriousness," the prosecutors continued.
A separate civil case brought by Erdogan seeking a complete ban on the poem is pending.
The Hamburg court is due to hear the civil case on November 2.