In its motion to dismiss, the software company also alleged in their defense that the 31-year-old star has a "history of misusing the legal system".
Lohan could theoretically appeal to the US Supreme Court, but failing that, her case against Take-Two Interactive is likely over.
Lohan's claim was that Lacey Jonas was essentially a "portrait" of Lohan, and that the game used her likeness to distribute promotional material, including putting the character on the box art, without her written consent.
In Grand Theft Auto V there is a "random events" mission where the player encounters an NPC called Lacey Jonas, hiding from paparazzi in an alley. The New York Appeals Court is the highest in the state, so the lawsuit can't be escalated further up the chain.
While New York's Court of Appeals has concluded that computer-generated images can be legally considered portraits, it has upheld that the images in question do not resemble Lohan.
Odds on White Easter with widespread alerts in force for snow disruption
A cold front Saturday night will bring some rain showers, and eventually some snow as well late Saturday into Sunday morning. The Met Office warning says: "Possibility of heavy snow over parts of England, Wales and southern Scotland".
In 2010, Lohan settled a $100 million lawsuit against E-Trade after she claimed that an ad featuring "milkaholic" baby named Lindsay was mocking her and her history of drug and alcohol abuse. "Lacey says that she has so many fans that "they could fill the entire country of Africa", including one fan who sent his own junk to her in a box".
But he added that Lohan could not prevail because Grand Theft Auto V merely depicted a generic "20-something" woman, without any suggestion it was her. Lohan's lawyers filed an appeal soon after.
"The artistic renderings are indistinct, satirical representations of the style, look, and persona of a modern, beach-going young woman".
From the get-go, it was apparent that Lindsay is trying to cash in from what she felt was her likeness in the game. Therefore, the case was dismissed.
Mob Wives star Karen Gravano was also part of the lawsuit over similarities of another character, but the court also rejected her claim, too.