The deal means James is likely to be sent to prison sooner but spared some courtroom humiliation in a case that alleged using a city-issued credit card for lavish personal expenses and for travels with several women other than his wife.
Prosecutors said they dropped the charges because another trial would have taken a lot of time and government resources, and because a second conviction probably would not mean much more prison time for the 72-year-old former mayor.
However, the government retains the right to reintroduce the dropped charges if any part of the earlier conviction is overturned on appeal.
"We believe that justice was well served on the day the jury convicted the former mayor on all of the corruption charges against him," U.S. Attorney Christopher J. Christie said in a statement. "And, as a consequence, by the significant prison term that he likely faces."
James was convicted last month on five counts related to scheming to sell city-owned property at a cut rate to his former mistress, Tamika Riley, who was also convicted on 13 counts.
The U.S. Attorney's Office said he's likely to be sentenced to 10 to 15 years in federal prison for that conviction. Sentencing for both James and Riley is scheduled for July 29.
James' lawyer, Alan L. Zegas, did not immediately return a call from The Associated Press on Monday.
Before the first trial, Zegas persuaded a judge to divide the cases against James, who served as mayor from 1986 to 2006, in two - one dealing with the land deals, the other charging credit card fraud.
The second trial was scheduled to start in early July.
The dropped charges included that he used city money to party at nightclubs in Rio de Janeiro, Brazil, fly to Puerto Rico and to put his car and city-owned vehicles on a ferry to Martha's Vineyard.
James was one of the most powerful figures snared in a series of corruption cases in New Jersey brought by the U.S. Attorney's Office, but one of the few to plead not guilty.