DaimlerChrysler has sold its remaining 12.4% stake in Mitsubishi Motors to investment bank Goldman Sachs.
Mitsubishi's new Colt model is enjoying good sales
German-US firm DaimlerChrysler said the sale would boost its 2005 profits by about 500m euros ($588.9m; £336m).
It added that current cooperation projects between the two companies would not be affected by the disposal.
Struggling Mitsubishi Motors is trying to return to profitability. Earlier this year DaimlerChrysler refused its call for financial support.
Mitsubishi has struggled in the face of a defect scandal.
Last year it was forced to admit that it had previously covered up a number of faults to avoid bad publicity.
On Thursday Mitsubishi said sales were recovering in Japan and Europe, but were still falling in the US.
DaimlerChrysler's shares were the fourth highest rising on the Frankfurt stock exchange following the Mitsubishi announcement.