“We don’t believe the facts in this case warrant the issuing of charges,” St Louis County prosecuting attorney Wesley Bell said in a statement.
Nelly, 49, whose birth name is Cornell Haynes II, grew up in the area. His lawyer, Scott Rosenblum, has said the search that led to Nelly’s August arrest was unwarranted.
Mr Bell’s office did not elaborate on why the decision was made to not file charges.
Mr Rosenblum said in an email that Mr Bell’s decision followed “a fair and impartial review of the evidence”.
Nelly was arrested at 4:45am on August 7 as he sought to collect several jackpots he had won at Hollywood Casino & Hotel in Maryland Heights, Missouri.
A trooper assigned to the casino told Nelly that a warrant search is required when a gambler wins more than a certain amount of money. Mr Rosenblum said no such warrant check is required.
The background check showed that a judge issued a warrant in December over a 2018 citation for operating a vehicle without proof of insurance and because of the outstanding warrant, Nelly was arrested and searched.
That is when the officer allegedly found four ecstasy pills. Police had sought a charge of felony possession of a controlled substance.
Meanwhile, the insurance charge has been resolved. Mr Rosenblum said it was dismissed after Nelly provided proof that he has car insurance.
Nelly, a three-time Grammy Award winner, is known for hits like Hot in Herre and Just A Dream. He has had four number-one hits and received nine Billboard Music Awards. He also has appeared in several films and TV series.
Nelly won Grammy Awards in 2002 for Best Rap/Sung Collaboration and Best Male Solo Rap Performance, and his second studio album Nellyville was nominated that year for both Best Rap Album and Album of the Year. He also won a Grammy the following year for Best Rap Performance by a Duo or Group the following year for Shake Ya Tailfeather.
In July, Nelly and partner Ashanti welcomed their first child together, a baby boy.