Law enforcement sources tell TMZ ... Nelly will no longer be questioned, and police have told him no further action will be taken. While the investigation is not officially closed, we're told detectives are not actively investigating. If new information comes to light, Essex Police could review it and go from there ... but, as of now, Nelly's off the hook.

As for the why? The accuser's attorney, Karen Koehler, tells TMZ ... "We told the Essex police we would no longer participate in their shoddy investigation and shifted our focus to the federal lawsuit where we will wait on the judge to decide that outcome." The accuser filed a lawsuit as Jane Doe back in November.

We broke the story ... Nelly's accuser put Essex Police on blast claiming they dragged their feet on the case while treating her like a suspect instead of a victim. She accused him of masturbating in front of her and forcing his penis in her mouth after one of his concerts in 2017.