The 24-year-old actress is expected to face charges later this week amid claims she walked out of upmarket California-based boutique Kamofie & Company wearing the $2,500 chain and had no intention to pay for it.
A source told RadarOnline.com: "There were two witnesses with Lindsay in the store who are going to tell her side of the story.
"Her assistant Eleanor and her friend Patrick were with her and they saw everything and they both know that Lindsay didn't steal the necklace."
According to the insider, the store told the 'Machete' star she could take the necklace but were angry because she didn't get them publicity, leading to the theft allegation.
The insider added: "She didn't steal the necklace and her eyewitnesses will tell the truth."
It has also been claimed that Lindsay was carrying over $6,000 in cash when she visited the store as there was another item she had hoped to purchase.
A source told website TMZ: "Lindsay had around $6,000 in cash with her because she had been eyeing a ring in the store, which was going for $3,400.
Lindsay had gone to the store several times previously, debating whether to buy it."
Lindsay was released from a three-month court-ordered rehab stay in early January - her fifth visit to a treatment facility - and is currently on probation until her next court hearing on February 24.
If she is charged over the theft, she could be found in breach of her probation and sent back to jail.
Read more: Lindsay Lohan has been accused of stealing jewelery