Kumanjayi White, 24, died in Alice Springs in May 2025 after the plain-clothes officers held him down in a supermarket, sparking national outrage and rallies calling for an independent investigation.
Northern Territory Police confirmed on Tuesday that the Director of Public Prosecutions had provided advice on the investigation into the death.
Police Commissioner Martin Dole said the advice was that there was "no reasonable prospect of a successful prosecution".
But the decision has prompted a renewed call for justice reform from Aboriginal and Torres Strait Islander Social Justice Commissioner Katie Kiss.
"This case yet again highlights the urgent need to ensure that deaths in custody should be independently investigated. Police should not be investigating other police," she said in a statement on Wednesday.
Mr White, who had a mental disability and was in care, died on May 27 in the Alice Springs supermarket's confectionery aisle.
Police allege he was shoplifting and assaulted a security guard.
In a statement on Tuesday, Mr White's family said they were heartbroken after being told no charges would be laid and asked when would they see justice.
They said they were going into a "black-out" for a week and asked to be left alone.
NT Police rejected calls for an independent inquiry and refused to stand the officers down or release CCTV footage of the incident, as demanded by Mr White's family led by his grandfather Ned Jampijinpa Hargraves.
The timing of the announcement on the eve of the anniversary of Mr White's death and on National Sorry Day had caused additional harm and distress to First Nations people, Ms Kiss said.
Police investigating other police in death-in-custody matters undermined community confidence and led to risks of flawed investigations, she said.
Governments must fully implement the recommendations of the Royal Commission into Aboriginal Deaths in Custody tabled 35 years ago, Ms Kiss said.
"There have been 634 Indigenous deaths in custody since the Royal Commission, and 16 in 2026 alone."
Governments must act to reduce Indigenous incarceration rates in line with Closing the Gap commitments, she said.
Mr White's case is now the subject of a coronial inquest.
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