Lindsay Lohan -- Prosecutor REJECTS Hit-and-Run Case

Lindsay Lohan will NOT be prosecuted for allegedly committing a hit-and-run in Hollywood in March, because prosecutors say the accuser is full of crap.

We broke the story ... Thaer Kamal, the manager of the Hookah Lounge -- claimed Lindsay was driving when she struck him on her way out of a nearby club.

According to the L.A. County D.A.'s rejection notification, Kamal was a "non-credible witness" who changed his story and refused to cooperate with law enforcement. He refused, among other things, to produce the medical records he claims he had from his alleged hospital visit.

Cops also say the surveillance video shows "no collision."