Shelby County District Attorney Steve Mulroy also announced Tuesday that he will not bring any criminal charges against Hemphill in connection with the case.
Nichols, 29, died three days after he was beaten by officers during a January traffic stop in Memphis.
Hemphill, who was not present at the beating, was fired from the Memphis Police Department in February for violating "multiple department policies" during the incident, the department said.
Mulroy said the decision to not press charges followed a "thorough investigation," including reviewing hours of body worn camera footage and interviewing witnesses.
"By no means do we endorse the conduct of officer Hemphill at that first traffic stop," Mulroy said. "But we do not believe that criminal charges are appropriate."
Five now-former Memphis police officers have been charged with second-degree murder in connection with Nichols' death. They all pleaded not guilty in their first court appearance on Feb. 17.
Mulroy said Hemphill has been cooperative throughout the investigation and expects that he will testify at trial in the case.
The district attorney said he spoke with Ben Crump, the attorney for the Nichols' family, Monday night, and that the family supports the decision not to press charges against Hemphill.
"It is our deepest hope and expectation that justice will be served fully, and that all who had a role to play in this senseless tragedy will be held accountable," Crump said in a statement read by Mulroy during a press briefing announcing his decision.
Mulroy said Tuesday that Nichols' autopsy is almost complete and that his office expects it to confirm that Nichols "died as a result of the injuries sustained in the beating."
Hemphill was among the first officers to encounter Nichols during the Jan. 7 traffic stop. He deployed his Taser during the confrontation and in his own body camera video is seen chasing Nichols down the road, but then turns back to the scene of the initial traffic stop. Hemphill was heard on his body camera video saying twice, "I hope they stomp his a--," after Nichols fled the scene of the initial traffic stop.
Mulroy said that upon extensively reviewing the footage from the scene, prosecutors determined that from Hemphill's perspective, at the moment he deployed his Taser it appeared as if Nichols was heading toward an open police cruiser car door as he fled the scene.
"That had to bear weight on our evaluation of his decision," Mulroy said.
Mulroy said Hemphill's comments were also made after his interaction with Nichols and "had no direct causal relationship to any injuries that Mr. Nichols sustained."
"We do not endorse Mr. Hemphill or his attitude, but what we have to decide is what we can prove beyond a reasonable doubt that he did that is in violation of a criminal statute," Mulroy said.
Hemphill was fired from the Memphis Police Department for violations including personal conduct, truthfulness and a violation for not using the Taser in compliance with regulations, the department said at the time.
The former officer was also named in a $550 million civil lawsuit filed on behalf of Nichols' family last month.
A seventh police officer, as well as three Memphis Fire Department members, were fired over the incident.
Prosecutors said Tuesday that they are still conducting an investigation into the fire department employees, but that they are not contemplating criminal charges against any other police officers who responded to the scene following the beating.
The criminal case involving the five former officers charged is still in its early stages and the trial is unlikely to begin this year, prosecutors said.