Judge Stephanie Sautner ruled that Lohan did not violate her probation because an order from another judge for the actress to be tested for alcohol had already expired.
Sautner said the only thing the former Mean Girls star was guilty of was “poor judgment” in partying on the roof of her home in LA’s Venice Beach neighbourhood.
Earlier reports suggested that Lohan could face jail for failing an alcohol test.
But the only punishments she will now face is a limit on the number of visitors allowed to visit her during the remainder of her house arrest, which is due to end on 29 June – and a ban on hosting any more parties.
She is being restricted to visits from one friend at a time, as well as family members.
Sautner told Lohan: “What you are guilty of is poor judgment to have parties on your roof. You are not to have parties, you can have one friend over at a time, plus family members or business associates.
“You can go on your roof. If probation calls you, you must answer. There is no drug or alcohol testing in effect.'
Judge Sautner said a previous judge in Lohan’s 2007 drink-driving case had only required Lohan to be tested for alcohol up until 25 February this year.
It means Lohan can drink as much alcohol as she wants while she serves out the remainder of her house arrest, as long as she does not drink-drive.