The International Criminal Court's chief prosecutor says she will not take action over Israel's raid on a Gaza-bound flotilla in 2010 that killed nine Turkish activists.
Fatou Bensouda said despite "reasonable basis" to believe war crimes had been committed, the ICC had to prioritise larger-scale events.
Israel said the ICC had wasted time on a "politically motivated" complaint.
Lawyers who brought the case said they planned to appeal against the decision.
Ten Israeli soldiers were injured in the incident on the Turkish-owned ship Mavi Marmara as it attempted to breach a blockade of the Hamas-run territory.
It caused a deep rift between Israel and Turkey, who were former allies.
Ms Bensouda said she did not want to minimise "the impact of the alleged crimes on the victims and their families" but she had to be guided by the Rome Statute, the founding treaty of the ICC.
"I have concluded that the potential case(s) likely arising from an investigation into this incident would not be of 'sufficient gravity' to justify further action by the ICC," she said in a statement.
Ms Bensouda said she had referred to the reports of the various inquiries that had previously examined the incident in making her decision.
In total, there were six ships in the flotilla that were boarded in international waters about 130km (80 miles) from the Israeli coast on 31 May 2010.
The activists, many from a pro-Palestinian Turkish group called the IHH, said they wanted to deliver aid to the Palestinian enclave by breaking Israel's naval blockade. Israel imposed the sea blockade after Hamas, which it has designated a terrorist group, seized Israeli soldier Gilad Shalit in 2006.
Israel says the IHH is closely linked to Hamas.
Commandos landed on the largest ship, the Mavi Marmara, by descending on ropes from helicopters.
Clashes broke out immediately and the commandos opened fire, although a UN inquiry was unable to determine at exactly which point the commandos used live rounds.
In a statement, Israel's foreign ministry said "Israel believes that it was pointless to initiate a preliminary inquiry in the first place."
It said Israel "regrets that the resources and precious time of the court - an institution established to combat the world's worst atrocities - were allocated to an unfounded and politically motivated legal complaint."
An Israeli inquiry at the time found the actions of the navy and the blockade were legal under international law, although there was some criticism of the planning of the military operation.
A UN panel in September 2011 agreed that the naval blockade was legal but said that the loss of life and injuries resulting from the use of force by Israeli troops was "excessive and unreasonable".
The panel's report said the commandos did face "significant, organised and violent resistance", requiring them to "use force for their own protection".
Israel maintains its blockade of Gaza to try to prevent weapons or materials reaching Hamas militants, while allowing humanitarian aid into the territory. Palestinians say the policy is tantamount to collective punishment.
Israel and Turkey are not members of the ICC, which only has jurisdiction over its members and cases referred to it by the UN Security Council.
Ms Bensouda opened a preliminary investigation into the flotilla raid last year after the Comoros - an ICC member - filed a complaint as the Mavi Marmara, although Turkish-owned, was flying a Comorian flag.
She said her office would continue to execute its mandate "without fear or favour" where the court's jurisdiction was established.
But lawyers representing the Comoros vowed to appeal against the decision, saying it was a "struggle for justice, humanity and honour".
"Our struggle is not over. We will appeal to a higher court for a review and hopefully achieve a favourable result," attorney Ramazan Ariturk said.