Mr LaBeouf was arrested following a confrontation at his live-streamed video project in New York, and was charged with assault and harassment.
Those charges have now been dropped.
A spokeswoman for the district attorney in New York's Queen's district told US media the case would be dismissed because of insufficient evidence.
Mr LaBeouf's art project, a 24-hour live stream called He Will Not Divide Us, encouraged members of the public to say those words into a camera outside New York's Museum of the Moving Image.
But Mr LaBeouf and a member of the public allegedly entered an altercation during a live broadcast in January.  The museum later said the site had become "a flashpoint for violence".
The live stream was planned to continue for the four years of Mr Trump's presidency, but the museum pulled support for the project in early February.
The project was forced to move location twice in the US, after opponents tried to disrupt it.
It then arrived in a new form in Liverpool in the UK - but faced similar problems.
Liverpool's Fact arts centre had been live-streaming a flag with the words, but cancelled the project after people climbed on the roof to try and remove the flag.
In addition to his performance art, LaBeouf is best known for films like Transformers, Indiana Jones and the Kingdom of the Crystal Skull and Wall Street: Money Never Sleeps.

Their ship, the FV Naham 3, was seized south of the Seychelles in March 2012.
The vessel and its crew were kept off the Somali coast, until it sank. The hostages - from a number of East Asian countries - were then brought ashore and held in the bushland.
They are believed to be some of the last remaining captives seized by Somali pirates in the mid-2000s.
Piracy off the coast of Somalia has reduced significantly in recent years.
The men are from Cambodia, China, Taiwan, Indonesia, the Philippines, and Vietnam.
John Steed, who works with the Hostage Support Partnership, said information about the hostages' condition was limited to photos sent to prove the men were still alive.
"We won't know until I actually pick them up inside Somalia tomorrow," he told the BBC.
"The guys are pretty ragged, very thin, malnourished. Several of them had to see a doctor today because they were unwell."
He said he could not comment on whether any payment was made to secure the captives. However, he said the local community and tribal elders were involved in the "difficult situation".
"These are poor fishermen. The ship had no value, they had no insurance, and of course governments don't want to be involved in these sort of negotiations either," he said.

The two senior members of staff in the university's marketing and student recruitment department were dismissed last December.
They had previously expressed concerns at plans to restructure the department.
The university said it was trying to resolve the matter with the pair and was disappointed at the strike.
The dispute is over the sacking of two staff, Helen Ghaly and Sam Bowker, a union official.
"No institution should be allowed to ride roughshod over agreed procedures and violate its employees' rights in this way," says UCU regional official Martyn Moss.
The UCU believes the pair may have been targeted as a result of their role in the union and has also lodged an unemployment tribunal complaint on their behalf.
The union says some 75% of the staff who took part in the ballot voted in favour of the strike.
In a statement, a University of Salford spokesman said: "We have been trying to resolve this dispute with the individuals concerned and are therefore disappointed that a day of strike action has been called.
"We expect all student lectures to run as normal on Thursday.
"We hope that a resolution can be found but, as this is an ongoing legal matter, we are unable to comment further."
Actor-turned-artist Shia LaBeouf will no longer face assault charges over a January incident at his anti-Donald Trump art installation.
[NEXT_CONCEPT]
Twenty-six men held hostage by Somali pirates for nearly five years have been released, international mediators say.
[NEXT_CONCEPT]
Staff at the University of Salford are expected to strike on Thursday in support of two sacked colleagues.