Video footage appearing to show the officers holding down the 37-year-old black man as they fired their weapons sparked days of protests in Baton Rouge.
News of the decision leaked to media on May 2 before the Baton Rouge mayor or the Sterling family had been told.
People soon began gathering outside the shop where the incident happened.
A vigil was organized for May 2, with small crowds gathering near Baton Rouge’s police headquarters.
The civil rights investigation was opened soon after Alton Sterling was killed outside the grocery shop he was selling CDs.
At the time, a series of fatal police shootings involving African-Americans had sparked a debate about police use of force.
The federal decision not to prosecute the two officers comes with a new US government and a new head of the Justice Department, Attorney General Jeff Sessions.
It does not mean the state of Louisiana could not bring its own charges.
Police were called after reports of a man threatening people with a gun outside a shop.
Mobile video footage appeared to show two officers wrestling a man in a red shirt to the floor.
One of the officers pinned the man’s arm to the floor with his knee and then appeared to pull out his gun and point it at the man.
A voice is heard shouting: “He’s got a gun!”
Then shots ring out and the camera moves away.
Alton Sterling, a father of five, died at the scene.
Police said the man refused to comply with the officers’ commands so they used a stun gun to bring him to the ground.
The officers say they saw a gun in one of his pockets and saw his arm move there as if he was reaching for it, just before he was shot.
There were nearly 200 arrests in the protests over Alton Sterling’s death, which preceded a turbulent couple of weeks in US race relations.
A day after the fatal confrontation, a black driver in Minnesota was shot dead in a traffic stop, and in the same week five police officers in Dallas were killed.
Less than two weeks later, three police officers in Baton Rouge were killed in an ambush, further inflaming tensions in that community.
Louisiana Governor John Bel Edwards, who called the video footage “disturbing” called for a federal investigation into Alton Sterling’s death.
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