The US Marine Corps has dropped all charges against one of the eight marines accused in the killings of 24 Iraqi civilians in Haditha in 2005.
The US marines say they came under fire after a roadside bombing
Sgt Sanick Dela Cruz has been granted immunity in exchange for his testimony, the Marine Corps said in a statement.
Three other marines are charged with unpremeditated murder and four with attempting to cover up the incident.
Iraqi witnesses say the shootings were in retaliation for a roadside bomb that had killed a US marine earlier.
"Charges against [Sgt Dela Cruz] were dismissed on April 2 after the government balanced his low level of culpability in the alleged crime against the potential value of his testimony," the Marine Corps said on Tuesday.
Lance Cpl Miguel Terrazas was ripped in half by a bomb that exploded under the marine convoy as it drove through Haditha, 240km (150 miles) north-west of Baghdad, on 19 November 2005.
Defence lawyers for the accused marines have argued that the squad of marines then came under fire from the houses in which the Iraqis died and that they had shot back in self defence.
The US military at first reported that the Iraqis, among them seven women and three children, had died in the bomb blast and subsequent firefight, but later said that was incorrect.
There was no full US investigation into what happened until three months after the event when video footage taken by a local human rights activist of the aftermath reached Time Magazine.
Once their report showed flaws in the initial marine statement, an investigation began.
Sgt Dela Cruz was charged with unpremeditated murder and making a false report about the incident.
A military judge has yet to decide if there is enough evidence against the remaining seven accused marines to convene a court martial.
If found guilty, the three marines charged with second-degree murder could face life imprisonment.
The Haditha inquiry is just one of a number the US military has been conducting into incidents of alleged unlawful killings by US forces in Iraq.