The court, explaining its findings, stated that it would be unreasonable to spend $1 million of its party money to hold a vote, especially taking into account that Netanyahu would have been the only candidate.
"In these conditions, the election is no longer necessary and Likud leadership has declared the winner as Benjamin Netanyahu," a Likud spokesman told AFP.
Senior party members are thought to be skeptical of the decision, as it was Netanyahu himself who called for a primary election on February 23, less than a year after the last general election held in March.
Victory in an early primary would help the politically embattled Israeli prime minister to protect his legitimacy as a party leader from challenges later in his current term.
Israeli analysts believe Netanyahu will appoint another Likud minister to the government. Coalition partners oppose the appointment, fearing it will give Likud too big a majority.
Netanyahu has been Israel's prime minister for almost a decade.