Prosecutors last April sought to put Heinrich Boere, who lives in a nursing home, on trial in Aachen for the killings in 1944, for which he was sentenced in absentia by a Dutch court to life imprisonment.
But, citing legal expertise, the court ruled that Boere is unfit to stand trial due to his many health problems - effectively cancelling what could have been the last Nazi war crimes trial on German soil, a court spokesman said.
Born in the Netherlands, Boere - who joined the paramilitary SS in 1940, the year after the outbreak of World War II in Europe - has acknowledged killing the resistance fighters.
"It was not difficult," he told the German newsmagazine Focus. "It was just a matter of pulling the trigger."
Boere fled in 1947 to Germany, where two years later he gave up his Dutch citizenship when he was sentenced to death by a special post-war tribunal in
Amsterdam. The sentence was later reduced to life imprisonment.
Germany refused to extradite Boere in 1980, says it was unable to determine if he was German or stateless.
In 2003, the Dutch justice minister asked that Boere serve his sentence in Germany - an idea rejected four years later by a Cologne court which claimed that the 1949 sentence had violated basic norms for a fair trial.
The same court nevertheless agreed that Boere's crime should not go unpunished - opening the way for the ultimately unsuccessful bid to try him in Germany.