Assange, the founder of WikiLeaks, is currently serving time in UK's Belmarsh for breach of bail conditions after he was granted asylum in the Ecuadorian embassy. Assange has always denied the rape accusations.
He took refuge in the Ecuadorian Embassy in London to avoid arrest in 2012 and was evicted in April this year when asylum was revoked. Upon leaving the building, he was immediately arrested by UK authorities and sentenced to 50 weeks in jail for a breach of bail.
According to a statement by the Swedish Prosecution Authority, "Deputy Director of Public Prosecution Eva-Marie Persson has today decided to discontinue the investigation regarding Julian Assange.
Assange is currently fighting extradition to the US over the publication of secret US documents and videos, including the widely known "Collateral Murder" video. The state of this action is most likely not affected by this Swedish decision.
In a tweet from the official WikiLeaks account a short time ago, Kristinn Hrafnsson, WikiLeaks editor-in-chief, said "let us now focus on the threat Mr Assange has been warning about for years: the belligerent prosecution of the United States and the threat it poses to the First Amendment."
A spokesman for Assange's legal team said : "From the outset of Sweden's preliminary investigation, Julian Assange's expressed concern has been that waiting in the wings was a United States extradition request that would be unstoppable from Sweden - and result in his spending the rest of his life in a US prison.
"Now that the US does seek Mr Assange's extradition to stand trial on unprecedented charges for journalistic work, it continues to be a matter of extreme regret that this reality has never been properly acknowledged and that the process in Sweden - with which Mr Assange has always expressed his willingness to engage and indeed did so - became so exceptionally politicised itself."