US Attorney General Loretta Lynch announced a federal civil rights probe into the Chicago police department's use of force last week as protesters took to the streets demanding that the mayor resigns.
Cook County Judge Diane Cannon acknowledged the tensions when issuing her ruling today, the Chicago Sun-Times reported.
"This is not a good time to try a case like this," Cannon said before announcing that Commander Glenn Evans was cleared of all charges.
But Cannon said the inconsistencies in Rickey Williams' account of the 2011 incident "taxes the gullibility of the credulous," the Chicago Tribune reported.
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She also dismissed evidence that Williams' DNA was found on the gun and said Evans has enough "lawful contact" with him to explain how it got there.
Police tactics and racism have been the subject of an intense national debate since sometimes violent protests erupted in Ferguson, Missouri in summer 2014 over the shooting death of another black teen, 18-year-old Michael Brown.
McDonald, who was holding a knife when he was shot but made no threatening gestures, is seen gunned down in the middle of the street as he walks away from police on October 20, 2014.
Prosecutors said officer Jason Van Dyke opened fire just 30 seconds after his cruiser pulled up to the scene and six seconds after stepping out of it. He kept shooting after McDonald's body hit the ground.
Chicago's embattled mayor Rahm Emanuel has fired the police chief and pledged the city's "complete cooperation" with the federal probe.