Zuma's surprise move came as thousands of people took to the streets of the administrative capital Pretoria to demand that he leaves office.
It paves the way for the release of the probe into accusations that he allowed a wealthy Indian family undue political sway, including letting them choose some cabinet ministers.
"My instructions are to withdraw the application," Zuma's lawyer Anthea Platt told the High Court in Pretoria at the start of the second day of the hearing.
It was due to be released on October 14 until Zuma moved to block it.
Also Read
The president, 74, has survived a string of damaging scandals, but faces increasing criticism as South Africa's economy stalls and after the ruling ANC party suffered unprecedented losses in local polls.
Some factions of the ANC, former anti-apartheid activists and business leaders have all recently called for him to stand down before his term ends in 2019.
Today, thousands of opposition party supporters, unions and civil groups marched through Pretoria to protest against Zuma's presidency.
"Zuma must step down and the Guptas must leave the country. If he does not step down today we will be here until he steps down.
Disclaimer: No Business Standard Journalist was involved in creation of this content