In a shock announcement, the Russian singer's lawyer told Judge Scott Gordon she will no longer be pursuing the claim against her former partner and father of her 18-month old daughter, Lucia.
The claims related to arguments between the couple that happened when they were still together in January 2010.
Gossip website TMZ reported Mel's lawyer, Stephen Kolodn, and the judge were both "visibly shocked" at the decision.
A source told the website: "Oksana dropped the domestic violence claim as a gesture - extending an olive branch in an attempt to settle the custody case."
Mel and Oksana have been locked in a bitter battle over custody of Lucia since they split in April 2010.
A Domestic Violence (DV) protection order obtained against Mel - prohibiting him contacting or harassing Oksana - has also been terminated as sources close to the star say she would like to be able to communicate directly with Mel.
The 'Lethal Weapon' star has yet to comment on the claim against him being dropped.
In march he did, however, plead No Contest to a misdemeanour charge of spousal battery, in a plea bargain which sees him undergo counselling and complete community service rather than jail time.
The actor and director's lawyer, Blair Berk, said at the time he had taken The Deal to escape a long court fight.
The couple's custody battle continues in closed court.