The decision was made following suggestions from Bynes' doctors who said she was still "very ill", according to TMZ.
The28-year-old star was admitted to the psychiatric facility in Los Angeles earlier this month following some bizarre behaviour.
Prior to being admitted into the facility, Bynes was arrested for allegedly driving under influence. She later was said showing weird behaviour in some occasions and accused her father of sexually abusing her before backpedalling her tweets, saying that a "microchip" in her brain was to blame for the alarming posts.
Bynes was also treated for similar problem last year. Back then, Bynes was placed under involuntary hold after she allegedly tried to set a fire on a stranger's driveway. Following her release, she enrolled in a college to study fashion.