Prosecutors in Stuttgart had looked at whether Winterkorn had manipulated markets by delaying the disclosure of VW's emissions scandal in 2015. VW in September that year admitted using engine control software to cheat U.S. diesel emission tests, battering its share price.
Until his resignation in 2015 in the wake of the scandal, Winterkorn was both CEO of Volkswagen and of the group's main shareholder, Stuttgart-based Porsche SE.
A spokeswoman for the Stuttgart prosecutors said the investigation was dropped because any penalty imposed by the court there would have little significance compared to what could result from the Braunschweig proceedings.
A lawyer for Winterkorn has said his client denies the charges.
Should Winterkorn be acquitted by the Braunschweig court Stuttgart prosecutors may decide to resume their investigation, she said.
(Reporting by Ilona Wissenbach; Writing by Ludwig Burger. Editing by Jane Merriman)