The showbiz patriarch - who is the father of troubled actress Lindsay Lohan - pleaded not guilty to a misdemeanor domestic violence charge in May after allegedly attacking his on-off girlfriend Kate Major.
However, a Beverly Hills judge has quashed the charge after Kate decided she wanted the matter to be resolved "privately".
Michael's attorney, Dana Cole, told E! News: "We are pleased to report that a Lohan finally won a criminal case.
"Kate did not want a spectacle. She wanted this privately resolved and we are pleased this happened. They are still good friends and hopefully they will remain this way."
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Following his arrest for the alleged incident in March, Michael denied the claims and accused Kate of lying, faking her injuries and attacking him.
He said: "I didn't touch her. I didn't do a damn thing to her. When we got back to the house, she was in the bedroom and I was cooking dinner when she started screaming. She was yelling 'What the f**k is this? You're a piece of s**t. Who is Maryann Mancuso?' and that is a friend of mine.
"She was holding my phone and I grabbed it away from her. She had something sharp in her hand and she grabbed my arm and slashed my arm open.
"I told her to get out of here, you get your stuff and get out of here right now. She said I gave her a fat lip, she has Restylane in her lips. This was all a set up."