The 24-year-old actress is accused of taking a $2,500 necklace from Kamofie & Co., a Venice jewelry store, on Jan. 22.
A source close to Lohan recently said the actress has decided to plead no contest to the reduced charge. Lohan is due back in court on May 11 for a pre-trial hearing, but she reportedly wants to put the case behind her and focus on her career.
At a hearing last month, Los Angeles Superior Court Judge Stephanie Sautner refused to dismiss the case but granted defense attorney Shawn Holley's motion to lower the charge to a misdemeanor, which carries a maximum one-year-jail term instead of potential prison time.
However, the judge found Lohan had violated her probation in a 2007 misdemeanor DUI case and sentenced her to 120 days in jail and 480 hours of community service -- 360 hours of service at the Downtown Women's Center and 120 hours of service at the L.A. County Morgue.
The district attorney's office has decided not to appeal Judge Sautner's decision to reduce the charge to a misdemeanor, according to spokesperson Sandi Gibbons. The office's appellate division reviewed their options and decided against moving forward with the appeal.
Lohan has been jailed three times and sent to rehab twice for probation violations.
City News Service contributed to this report.