Steven Johnson, 71, and Glenn Fenwick, 59, were last year charged with murder over Mr Jarvis' disappearance from a small town in the state's west.
Mr Jarvis, 38, was last seen leaving his home in Wangoom, near Warrnambool in Victoria's west, in June 2006.
His body has not yet been found, but police believe it is buried in Framlingham Forest, a native woodland owned by an Indigenous trust.
Johnson was released on bail with a $500,000 surety in June this year, with strict conditions including that he was banned from going near the forest.
His lawyers previously told the Supreme Court the prosecution's case against Johnson was "very weak" with only circumstantial evidence connecting him to the alleged killing.
Prosecutors previously alleged Johnson and Fenwick killed Mr Jarvis in a driveway by hitting him with an imitation firearm, pinning him on the ground and hitting him again with a baseball bat.
However, the prosecution withdrew the murder charge against Johnson at Geelong Magistrates Court on Tuesday.
Fenwick, who is in custody, remains charged with murder.
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