The Crown Prosecution Service said it would be too difficult to prove the owner of the Alsatian had been negligent, despite the fact the dog scaled a five-and-a-half foot fence and tore into Abbie Varrow's face while she was playing on a trampoline in a friend's garden.
The youngster from Great Notley, Essex, had to undergo more than two hours' surgery and suffered severed nerves in her nose.
Her parents, Tony and Alyson, have reacted with fury at the CPS's decision.
Tony, 40, said:
I am absolutely furious with the CPS. My daughter has been scarred for life and she is mentally scarred too by what happened.
"I don't understand how this dog could have done this and yet nothing happens?"
A Crown Prosecution Service spokesman said after a careful review, it was decided there was 'insufficient evidence' for charges.
He said: "Our sympathies are with the victim of this horrendous incident, but we were unable to show to the very high standard of proof required in respect of criminal proceedings that the owner was negligent in the control of his dogs."
Before on Parentdish: Five-year-old suffers facial injuries after dog attack