In what became known as the Carlton Affair, Strauss-Kahn was charged last year with helping to procure prostitutes for sex parties.
The prosecutor's office in Lille, where some of the parties took place, announced on Tuesday that it considered the evidence against Strauss-Kahn and one other man, Jean-Luc Vergin, to be insufficient for them to be sent to trial.
The prosecutor recommended that 12 other men be tried but said the specific charge that they had operated as part of an organised gang should be dropped.
The judge in charge of the case now has one month to decide whether to follow the prosecutor's advice or to insist on Strauss-Kahn standing trial.
In France, it is not unusual for judges to ignore prosecutors' recommendations but Strauss-Kahn's lawyers voiced confidence their client would be cleared.
"I'm happy the prosecutor shares our view that there is no admissible evidence of any crime or offence having been committed," lawyer Henri Leclerc said.
Strauss-Kahn admits attending sex parties in France and the United States but insists he did not know some of the women were being paid.
His lawyers argued that he could not have known they were prostitutes because he had only ever seen them naked.
If the pimping charges are dropped, Strauss-Kahn will have emerged from two years of legal turmoil without having been convicted of any crime.
His reputation has been badly damaged though and his political career appears over.
In December, he agreed to pay undisclosed damages to Nafissatou Diallo, the New York hotel maid whose 2011 allegation of attempted rape led him to resign from his IMF job and wrecked his chances of becoming French president.
Strauss-Kahn admitted a sexual encounter took place but insisted it was consensual. A criminal probe into the incident collapsed after the maid changed her version of events, and was recorded discussing the case with her boyfriend.
The Lille pimping case was one of a series of probes that were launched in the aftermath of Strauss-Kahn's arrest in New York.
French writer Tristane Banon accused him of trying to rape her in 2003. Investigators concluded that while there was evidence of sexual assault, the alleged attack had occurred too long ago for any trial.
Strauss-Kahn was also investigated over an allegation that he had taken part in the gang rape of a Belgian prostitute. The case was dropped when she recanted and said she had consented to sex.
Prior to his arrest in New York, DSK, as he is known in France, had looked certain to secure the Socialist Party's nomination as its candidate for the 2012 presidential election.
As it was, Strauss-Kahn's fall from grace cleared the way for party insider Francois Hollande to claim the nomination and he went on to defeat the incumbent, Nicolas Sarkozy.
Strauss-Kahn subsequently separated from his third wife, Anne Sinclair, a former television journalist and a wealthy heiress who reportedly helped him pay off Diallo.