There was no plea deal in the case, whose records have now been sealed as a result of the dismissal.
A spokesman for Cook County State's Attorney Kimberly Foxx, whose office was prosecuting Smollett, said, "After reviewing all of the facts and circumstances of the case, including Mr. Smollett's volunteer service in the community and agreement to forfeit his bond to the City of Chicago, we believe this outcome is a just disposition and appropriate resolution to this case.
Foxx recused herself from the investigation in February after facilitating conversations between Smollett's family and the Chicago Police Department. She initially cited "potential questions of impartiality based upon familiarity with potential witnesses in the case" as the reason for stepping away from the case.
Smollett's legal team, in a statement, reiterated its claim that Smollett was the victim of an actual attack.
"Today, all criminal charges against Jussie Smollett were dropped and his record has been wiped clean of the filing of this tragic complaint against him," Smollett's legal team said. "Jussie was attacked by two people he was unable to identify on January 29th."
The dismissal is a "stunning, surprising turn of events. Like something you might see on Mr. Smollett's TV show," Georgetown University Law professor Paul Butler said on MSNBC.
Chicago Police Department Commander Edward Wodnicki, whose department had conducted the investigation into Smollett, told WMAQ-TV he was outraged by the dismissal.
"It's a punch in the gut. Is absolutely a punch in the gut," Wodnicki said. "We worked closely throughout our three-week investigation to get to the point where we arrested the offender. For the state's attorney at this point to dismiss charges without discussing this with us at all is just shocking."
"They weren't courteous to give us a heads-up" about the dismissal, he said.
"This is a slap in our face."
Wodnicki said there was "overwhelming evidence" against Smollett and called the case against him "rock solid."
"We wasted time and effort on a reported serious crime to get to the point it's a lie?" Wodnicki said. "I want reimbursement," he said, noting that the Chicago PD had spent more than $10,000 on the probe.
"Citizens should be angry," Wodnicki said.
Emanuel said Smollett's claim of the assault had dragged the city of Chicago's name "through the mud."
"I support the hard work of our police," Emanuel said.
He noted that a grand jury had indicted Smollett and that the case was accepted by prosecutors weeks ago.
It is not clear whether the dismissal will affect a separate investigation by the FBI into a letter that threatened Smollett and which was sent to the studio where "Empire" is filmed shortly before the alleged attack on Smollett.
Chicago police have said that Smollett himself sent that letter.
Smollett has not been charged by federal authorities in connection with the letter. A spokesman for the U.S. Attorney's Office in Chicago, which would handle any federal prosecution of Smollett if it were to be initiated, declined to comment.
In the wake of Smollett's arrest in February, producers of the 20th Century Fox Television show "Empire" decided to remove the actor from the final two episodes of the latest season. Warner Bros.-owned TNT also pulled an episode of "Drop the Mic" that featured Smollett.
In a statement, 20th Century Fox Television and Fox Entertainment said, "Jussie Smollett has always maintained his innocence and we are gratified that all charges against him have been dismissed."
As of last week, 20th Century Fox Television is owned by Disney.
"Our son and brother is an innocent man whose name and character has been unjustly smeared," said the Smollett family in a statement to The Hollywood Reporter. "Jussie is a son, a brother, a partner, a champion for human rights, and a genuine soul who would never be capable of what he was falsely accused of. He was the victim of an assault and then falsely blamed for his own attack."
The statement continued, "This morning truth has prevailed and he has been vindicated. All charges have been dismissed and his record expunged (cleared). The painful incidents we've witnessed him endure over the past 7 weeks have been heartbreaking and unjust to say the least. While many were quick to rush to judgement before hearing the actual truth, we are grateful that the truth about Jussie has come to light. We look forward to bringing the real perpetrators to justice. We thank God and our village for standing by us during this trying time."
Smollett's attorneys had included celebrity lawyer Mark Geragos. On Monday, Geragos was identified as a co-conspirator of lawyer Michael Avenatti in an alleged scheme by Avenatti to extort up to $25 million from athletic shoe giant Nike by threatening to release damaging information about that company.
Geragos has not been criminally charged in that case.
Patricia Brown Holmes, a lawyer for Smollett, said the $3,500 that Smollett gave the brothers who claimed the attack was staged actually was payment for nutrition and training.
"We have gotten to a result which is the right result in this case, and we are happy with that," Holmes said during a news conference Tuesday.
Smollett "is a good, solid citizen of the city of Chicago," she said.