The boys had been charged in connection with an alleged serious sexual assault on a teenage girl in the Clonavon Terrace area of the Co Antrim town in June.
The incident sparked days of race-related anti-immigration rioting in Ballymena, with linked sporadic outbreaks of violence in other parts of Northern Ireland.
The PPS said there had been “significant evidential developments” in the case.
The boys are aged 14 and 15 and have been in custody since they first appeared in court in June, when they addressed the court through a Romanian interpreter.
There were several nights of rioting in Ballymena in the summer (Liam McBurney/PA)
Today’s News in 90 Seconds – Friday, November 28
A PPS spokesperson said: “The PPS has a duty to keep prosecution decisions under consideration and take into account any change in circumstances that occurs as the case proceeds.
“Where new information or evidence becomes available, it will be considered along with all the existing information and evidence in the case and the test for prosecution applied.
“We have recently been made aware of significant evidential developments in this case.
“In light of this new evidence, it has been determined that the test for prosecution is no longer met on evidential grounds, and therefore the case should not proceed.
The charges were formally withdrawn at Laganside Youth Court on Friday (Liam McBurney/PA)
“The prosecution team and the police investigation team met with the complainant and her family this morning to explain the reasons for the decision.”
All charges faced by both defendants were formally withdrawn at Laganside Youth Court on Friday.
The PPS added: “All PPS decisions in this case were taken independently, impartially and in line with the code for prosecutors.
“Due to the importance of respecting the privacy, anonymity, and wellbeing of all the young people involved, including the complainant, the PPS will not be making any further comment.
“We would appeal to the public not to engage in speculation, including online, about the case.”
Both boys had been accused of attempting to rape the girl.
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Police Service of Northern Ireland (PSNI) Detective Chief Inspector Stephanie Finlay said any reported sexual crime is taken “extremely seriously and thoroughly investigated by our specially trained team of detectives”.
She added: “The PSNI will follow up on all lines of enquiry as we seek to ensure justice.
“Information gathered during an investigation will be submitted to the Public Prosecution Service who then make an independent decision in accordance with evidential tests.
“We continue to encourage those who have been victims of sexual crimes to come forward and report to us. You will be dealt with sensitively and will be offered the appropriate additional support.
“We will listen, treat you with respect and act to keep you and others safe.
“We are aware that this case has generated significant public interest.
“I would remind everyone to remain respectful in light of today’s decision, and refrain from speculation, particularly on social media.”