Travolta was accused of assaulting the unnamed man on January 16 at the Beverly Hills Hotel in a $2 million lawsuit filed last week.
The masseur - dubbed John Doe One - had alleged that Travolta became aggressive after his attempts for sexual contact were rebuffed and also claimed the actor said that Hollywood "is controlled by homosexual Jewish men who expect favours in return for sexual activity".
John Doe One's claims were later discredited when flight records showed that Travolta was in New York City on the day of the alleged incident.
The unnamed masseur has now filed papers in Los Angeles court to have his lawsuit formally dropped, according to TMZ.
Three other men are currently accusing Travolta of sexual misconduct over incidents which allegedly occurred over the last several years.
Travolta denies all of these claims and has announced plans to counter-sue his accusers.
The actor has been married to Kelly Preston for 22 years.