The charges cannot be dismissed formally until the end of the inquiry, but prosecutors said all detained miners would be freed.
Local authorities used a controversial apartheid-era law to accuse the miners of provoking police to open fire.
Miners were demanding a huge pay rise and recognition of a new union.
The killings, at the Marikana mine, owned by Lonmin, shocked the nation.
State prosecutors charged 270 miners with murder under the “common purpose” doctrine.
The rule was used by the white-minority apartheid regime to crack down on its black opponents, and at the time was opposed by the now governing African National Congress.
Lawyers had asked President Jacob Zuma to reverse the decision.
But he said in a statement earlier that he would not intervene in the case.
Acting national director of prosecutions Nomgcobo Jiba held a news conference on Sunday to announce the charges would be scrapped.
“Final charges will only be made once all investigations have been completed,” she said.
“The murder charges against the current 270 suspects will be formally withdrawn provisionally in court.”
She said those whose addresses have been verified by police would be released on Monday, and the rest would remain in custody until their next court appearance on Thursday.
The decision has salvaged some of the government’s credibility.
But the government will have to make sure that the miners co-operate with the judge-led commission of inquiry that was set up by Jacob Zuma to investigate the 16 August shootings.
South African media reports suggest some of the mine workers have decided to hold their own inquiry into the killings, which would create more embarrassment for Jacob Zuma.
On Friday, Justice Minister Jeff Radebe said the charges had “induced a sense of shock, panic and confusion” in the public and demanded a report from state prosecutors to explain their rationale.
Police said they opened fire on the strikers at Marikana after being threatened by a crowd of protesters who advanced towards them, armed with machetes.
The 270 miners, six of whom remain in hospital, were arrested during the protests.
They were charged on Thursday, with the prosecutors arguing they were part of the crowd whose actions provoked the police into opening fire.
No police officers have been charged over the deaths because a judicial inquiry and an internal police review are under way, but these are expected to take several months to complete.
The strike turned violent before the police shooting, with the deaths of 10 people including two police officers and two security guards who were hacked to death.
The protests were triggered by demands for a huge pay rise and recognition of a new union.
Talks are continuing to resolve the dispute, which has shut the mine for the past three weeks.
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