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Israel's attorney general says no policemen will be prosecuted over the killing of 13 Arab Israeli protesters in 2000.
Menachem Mazuz said there was insufficient evidence to pursue a prosecution against officers who opened fire during anti-government riots.
The unrest erupted in sympathy with the Palestinian uprising against Israel.
Relatives of the victims were angry at the decision. One said it "gives the green light for attacks on Arabs".
In northern Israel, thousands of Israeli Arabs took to the streets for several days in October 2000, expressing solidarity with the "intifada" that had broken out in the occupied Palestinian territories.
Protesters threw stones and petrol bombs at police and passers by, leaving several people injured and one Jewish motorist dead.
Police opened fire with live ammunition to try to quell the protests, killing 13 people near the Israeli Arab town of Um el-Fahm.
An Israeli state commission into the killings, released in 2003, found that police were largely to blame and criticised Israel's treatment of its Arab minority.
But Mr Mazuz said there was "insufficient evidence in the investigative material to indict any of the suspects".
He also said the families of the victims had not allowed autopsies on their bodies.
Abdel Abu Salah, whose son Walid was one of the 13 killed, said: "This decision is a black stain on Israeli democracy and deepens the chasm between Jews and Arabs.
"This gives the green light for attacks on Arabs," he added.
Arab Israeli MP Ahmed Tibi said: "It's unacceptable for killer policemen to open fire with impunity at citizens and not be tried in court.
"This is further proof of the discrimination against the Arab population."
Arabs make up nearly a fifth of Israel's population. They have full rights under law, but often complain of discrimination.