According to E! News, the Los Angeles District Attorney cleared the actor due to a lack of evidence and eyewitness accounts from fellow party attendees that claim Banks was the main aggressor.
The rapper had originally filed a report on Crowe and claimed on social media that he had attacked her and used racial slurs while throwing her out of the party.
According to TMZ, the D.A. had concluded that Crowe physically tossing her was "justified to prevent the imminent violence threatened by Banks."
"Even if I were being erratic, you should have enough sense to have me escorted out properly," Banks said in an interview in October. "And keep your hands and your spit to yourself."
Rapper RZA, who had brought Banks to the party, shared a different side of the story and refuted Banks' claims while taking Crowe's side.
"Azealia threaten to cut a girl in the face with a glass, then actually grabs a glass and physically attacks for no logical reason," RZA explained at the time.
"Russell blocked the attack and expelled her from the suite. Seeing is believing and I saw her behave as an obnoxious erratic individual and in the circles I frequent this was unprecedented. I was totally puzzles by her and thought maybe meds or booze or something had her zoned out. Nevertheless I made sure she got home safe," he continued before denying that Crowe had used racial slurs.