Spector claims he gave Shapiro a $1 million (GBP556,000) retainer after he was arrested for the murder of actress Lana Clarkson in February 2003 at his California home.
But he alleged the lawyer did "very little legal work" and used his "legal plight as an opportunity to unabashedly line their own pockets".
Spector - whose trial will begin in April 2006 - filed a dismissal without prejudice at Los Angeles Superior Court on Thursday (15DEC05). The move means he can file another suit in the future if he chooses.
Shapiro's lawyer says, "We're very happy because the case has been completely dismissed and Bob Shapiro has been completely vindicated."