CHICAGO — In a startling about-face on Tuesday that drove a rift between Mayor Rahm Emanuel and local prosecutors, the Cook County State’s Attorney’s Office dropped all charges against the “Empire” actor Jussie Smollett, who had been accused of staging a hate crime attack in the city’s downtown in January.

The decision, announced in court in a hastily convened hearing, slammed the door on a case that became a national fascination and flashpoint, with its overtones of racial and political discord in a city with a history of tension over law enforcement.

It drew waves of celebrity commiseration and torrents of finger-shaking tweets as the victim turned into a suspect and then a defendant. And by Tuesday night, many questions remained unanswered, including why prosecutors had suddenly decided to let Mr. Smollett off only a month after his arrest, and what actually happened at 2 a.m. on Jan. 29 as he was walking back from a late sandwich at a Subway.

Mr. Smollett, who is black, gay and outspoken on social issues, had told the police that two men jumped him, while taunting him with homophobic and racial slurs and yelling “This is MAGA country,” a reference to President Trump’s “Make America Great Again” slogan. The assailants, according to Mr. Smollett, tied a rope around his neck and poured a chemical substance on him. He was briefly treated at a hospital.

The police spent days poring over surveillance camera footage to locate the two men, and eventually homed in a pair of brothers who knew Mr. Smollett. But after hours of questioning, the police said, the men said they had been paid by the actor to concoct the attack as a way to gain publicity because he was unhappy with his “Empire” salary.

The resulting charges embarrassed Mr. Smollett, 36, imperiled his career and raised the possibility of jail time. As of Tuesday, his record, for official purposes at least, had been wiped clean.

The state’s attorney’s office said in a statement, “After reviewing all of the facts and circumstances of the case,” including Mr. Smollett’s performance of community service and an agreement to forfeit his $10,000 bond payment, “we believe this outcome is a just disposition and appropriate resolution.”

In an interview later, Joe Magats, the prosecutor who made the decision, said there had been no problems with the evidence or the police investigation into Mr. Smollett. He also noted that Mr. Smollett had no previous criminal record and said that dropping the charges “didn’t exonerate him.”

[A timeline of events of the Smollett case.]

“We work to prioritize violent crime and the drivers of violent crime,” Mr. Magats said. “I don’t see Jussie Smollett as a threat to public safety.”

But soon afterward, in a striking news conference, the mayor and the police superintendent, Eddie Johnson, sharply criticized the State’s Attorney’s Office and the actor himself.

Mr. Emanuel said that Mr. Smollett’s celebrity had played a role in the decision, calling it “a whitewash of justice.”

[More about the war of words in Chicago on Tuesday.]

“You cannot have, because of a person’s position, one set of rules apply to them and one set of rules apply to everybody else,” Mr. Emanuel said.

“Our officers did hard work, day in and day out, countless hours, working to unwind what actually happened that night,” he added. “The city saw its reputation dragged through the mud.”

Mr. Johnson said, “I think this city is still owed an apology.”

“At the end of the day,” he added, “it’s Mr. Smollett who committed this hoax.”

[Read more about Jussie Smollett here.]

The state’s attorney’s office did not respond to the remarks.

Exoneration or no, for Mr. Smollett, who maintained his innocence, the outcome could hardly have been better. After the hearing, he read a statement outside the courthouse without taking questions. He thanked his family, friends and “the incredible people of Chicago and all over the country and the world who have prayed for me, who have supported me.”

“I’ve been truthful and consistent on every single level since Day One,” he said somberly. “This has been an incredibly difficult time, honestly one of the worst of my entire life, but I am a man of faith and I’m a man that has knowledge of my history, and I would not bring my family, our lives or the movement through a fire like this.”

Investigators initially treated the case as a possible hate crime, especially because a week before, a threatening letter was sent to Fox production offices in Chicago directed at the actor. Mr. Smollett, who also maintains a singing career, plays the gay musician son of the head of Empire Entertainment on the Fox television show.

Many celebrities and advocacy groups expressed their support for Mr. Smollett, painting the attack as another example of the increasing number of hate crimes in the era of Mr. Trump’s presidency. But soon, doubts about Mr. Smollett’s account played into a different narrative: that it was a real-life “false flag” concocted to shame the president and his supporters.

Before Mr. Smollett’s arrest, the president described the attack as “horrible.” After the arrest, Mr. Trump asked on Twitter, “what about MAGA and the tens of millions of people you insulted with your racist and dangerous comments!?”

.@JussieSmollett – what about MAGA and the tens of millions of people you insulted with your racist and dangerous comments!? #MAGA

— Donald J. Trump (@realDonaldTrump) February 21, 2019

After Mr. Smollett’s initial report, detectives had trouble finding surveillance video of the attack, or witnesses, in an area that they said was well covered with cameras.

On Jan. 30, the police released images of two men seen on a surveillance camera and eventually identified them as two brothers, Olabinjo and Abimbola Osundairo. After initially denying involvement, they said that Mr. Smollett had enlisted them for $3,500.

According to the police, phone records showed that Mr. Smollett spoke to the brothers an hour before he said the attack took place, and then an hour afterward.

Police also said Mr. Smollett sent himself the threatening letter, an aspect of the investigation the F.B.I. had taken over. The F.B.I. declined to comment.

Mr. Smollett denied having planned the attack, and his lawyers described the $3,500 as payment for a physical training program to get him in shape for a music video.

“It was for nutrition and training,” Patricia Brown Holmes, one of his lawyers, said on Tuesday. “They were his trainers.”

Until Tuesday, the prosecutor’s office had appeared to be taking a hard line with Mr. Smollett. A couple of weeks after his arrest, the office announced that a grand jury had indicted him on 16 separate counts of disorderly conduct related to the filing of a false police report. The move appeared to increase the pressure on Mr. Smollett, whose lawyers described it as “prosecutorial overkill.”

But the state’s attorney’s office had already drawn scrutiny for its handling of the case. The Chicago Tribune reported that after police department sources began leaking their doubts about Mr. Smollett to local reporters, Tina Tchen, a former chief of staff to Michelle Obama, had emailed Kimberly Foxx, the top prosecutor, saying the actor’s family had “concerns about the investigation.”

Ms. Foxx told Ms. Tchen, and separately a member of Mr. Smollett’s family, that she had asked the police superintendent to request that the F.B.I. take over the investigation.

“Omg this would be a huge victory,” the relative replied in a text message, according to The Tribune.

Once it became clear that Mr. Smollett was himself a suspect, Ms. Foxx recused herself from the case, but her actions had already embittered the police department, and the head of the police union accused her of interference.

The resolution of the case struck some legal experts as atypical, and the two sides could not even agree on what to call it. Prosecutors characterized it as an agreement, but Mr. Smollett’s legal team denied that any deal had taken place; in any event, Mr. Smollett was required to forfeit the $10,000, which would have been returned to him had he shown up for all his court dates. (Had he been convicted, he could have been required to pay far more than that to reimburse the police for their time spent on the case.)The police department’s main spokesman highlighted the unusual nature of the resolution, saying, “In our experience, innocent individuals don’t forget bond & perform community service in exchange for dropped charges,” he wrote on Twitter, apparently mistyping “forfeit.”

Chicago police detectives did an excellent investigation and their work was reaffirmed by an independent grand jury who brought 16 criminal counts. In our experience, innocent individuals don’t forget bond & perform community service in exchange for dropped charges. https://t.co/P9rsvUMwwZ

— Anthony Guglielmi (@AJGuglielmi) March 26, 2019

In an interview following his news conference, Mr. Emanuel took issue with Mr. Smollett’s continued professing of his innocence. “He is walking around like he is the victim here of an unjust act,” the mayor said, adding that he had been given no explanation from the prosecutor’s office about what led them to drop the case.

Had the case gone to trial, defense lawyers almost certainly would have tried to make the most of the brothers’ shifting accounts. And some tweets and accounts surfaced later suggesting that one of them had made homophobic remarks in the past. The brothers, who have not been charged, did not respond to emailed questions on Tuesday and their lawyer declined to comment.

Darryl A. Goldberg, a Chicago defense lawyer not involved in the case, said, “Frankly, despite the news conferences by law enforcement laying out what they believed was overwhelming evidence of guilt, as a defense lawyer I have always thought the prosecution would have a difficult time meeting its burden of proof.”

Even with the case behind him, Mr. Smollett’s future prospects are uncertain. His character was removed from the final two episodes of the current, fifth season of “Empire,” and Fox Television has not said whether it would pick up the series for another season.

In a statement, Fox said, “Jussie Smollett has always maintained his innocence and we are gratified on his behalf that all charges against him have been dismissed.”

After delivering his remarks on Tuesday, Mr. Smollett was immediately surrounded by fans — one shouting “Free Jussie!” — and posed for selfies before being ushered into a black SUV.

Asked if he believed he should be back on “Empire,” Mr. Smollett did not respond. One bystander who said she loved the show answered for him: “Yes, he should.”