Investigators said there were "strong indications" Putin had personally approved the transfer of the missile to pro-Russian separatists during fighting in eastern Ukraine in 2014, citing intercepted phone calls.
But the probe is being suspended because "all leads have been exhausted" into the shooting down of the plane, which crashed with the loss of all 298 people on board.
The announcement comes less than three months after a Dutch court convicted two Russians and a Ukrainian of murdering those aboard MH17, after trying them in their absence.
"There are strong indications that the Russian president decided on supplying the Buk TELAR to the DPR (Donetsk People's Republic) separatists," the Joint Investigation Team of six countries probing the crash said in a statement.
Russian officials even postponed a decision to send weapons to Ukrainian separatists because Putin was at a D-Day commemoration in France in June 2014, the investigators said.
They played an intercepted telephone call from an advisor saying the delay was "because there is only one who makes a decision (...), the person who is currently at a summit in France."
In 2019, international investigators released intercepted phone calls showing what they said were links between the rebels and "high-ranking" Russian officials, including Vladislav Surkov, a top aide to Putin.
Investigators had previously said they wanted to find out who actually crewed the BUK missile, and who was in the chain of command. The missile was allegedly brought from a Russian military base in the city of Kursk.
But they admitted that was not possible for now.
Putin however benefits from immunity as head of state, making any effort to prosecute the Russian leader impossible, the investigators said.
They added that "although we speak of strong indications, the high bar of complete and conclusive evidence is not reached" in relation to Putin.
"The investigation has now reached its limit, all leads have now been exhausted, the investigation is therefore being suspended," Dutch prosecutor Digna van Boetzelaer told a news conference in The Hague.
"The evidence is insufficient for more prosecutions."
Russia dismissed last year's Dutch verdict at the time as "scandalous" and politically motivated.
Moscow has consistently denied any involvement in the shooting down of MH17.
The victims of the disaster came from 10 countries, including 196 Dutch, 43 Malaysians and 38 Australian residents.