Lagarde, who denies any wrongdoing, told reporters late on Friday that she was not surprised by the prosecutor's decision.
"I have always acted in the best public interest and in accordance with the
law," she said Lagarde. "My explanations came as a response to the doubts that had been brought up regarding the decisions I had taken at the time.”
The case dates back to 2007, when she was finance minister, and concerns her handling of a dispute that resulted in 400 million euros being paid to controversial French businessman Bernard Tapie.
Although she has not been formally charged, Lagarde's assisted witness status means she could still face further questions and is advised to bring a lawyer because she could face charges at a later stage.
Lagarde said she would return to Washington and report to the IMF board, which has declared its confidence in her.
Criminal charges against Lagarde would have been an embarrassment for the IMF, after the 2011 resignation of her predecessor Dominique Strauss-Kahn resigned in disgrace in 2011 over an alleged assault on a New York hotel maid.
"The board will be briefed again in the coming days," IMF spokesperson Gerry Rice said in a statement on Friday. "The Executive Board has been briefed on this matter several times and on each occasion expressed confidence in the managing director's ability to effectively carry out her duties."