Four officers will continue working on the case, down from 29 at the height of the inquiry.
The Metropolitan Police stressed that the investigation has not reached a conclusion and "there are still focused lines of investigation to be pursued".
More than 60 "persons of interest" have been investigated, while 650 sex offenders have "been considered".
Madeleine's Catholic parents Kate and Gerry said they "fully understand" why the team is being reduced.
Assistant Commissioner Mark Rowley, who had overseen the inquiry since 2012, said: "The Met investigation has been painstaking and thorough and has for the first time brought together in one place what was disparate information across the world.
"This work has enabled us to better understand events in Praia da Luz the night Madeleine McCann went missing and ensure every possible measure is being taken to find out what happened to her.
"We still have very definite lines to pursue which is why we are keeping a dedicated team of officers working on the case."
He said Portuguese police are "fully committed" to probing Madeleine's disappearance.
Mr Rowley added: "The Met was asked to take on this exceptional case as one of national interest.
"We were happy to bring our expertise to bear only on the basis that it would not detract from the policing of London; and the Home Office have additionally funded the investigation above normal grants to the Met. That will continue at the reduced level."
Kate and Gerry McCann said: "We would like to thank all the staff from Operation Grange for the meticulous and painstaking work that they have carried out over the last four and a half years.
"The scale and difficulty of their task has never been in doubt.
"We are reassured that the investigation to find Madeleine has been significantly progressed and the MPS has a much clearer picture of the events in Praia da Luz leading up to Madeleine's abduction in 2007.
"Whilst we do not know what happened to Madeleine, we remain hopeful that she may still be found given the ongoing lines of inquiry."
Madeleine was three when she went missing from the family's holiday apartment in Portugal's Algarve on May 3 2007, triggering one of the most high-profile missing persons investigations of all time.
Detective Chief Inspector Nicola Wall will continue to head the probe. The investigation has cost more than £10 million so far and the Home Office has budgeted £2 million over the next year.