The girl claimed elementary school teacher Mark Berndt reached toward her genitals during class, but she pushed his hand away, sheriff's Sgt. Dan Scott said.
The alleged incident occurred in September 1993 but wasn't reported by the girl's mother to officials at Miramonte Elementary School until the following January, he said.
The school notified the Sheriff's Department, which investigated Berndt. Scott said the results of the investigation were sent to prosecutors with a recommendation to pursue a charge of committing a lewd act on a minor under the age of 14, but the case was rejected.
"Based on what I read, it was a thorough and complete investigation," said Scott, who noted the investigator who handled the case has retired.
Sandi Gibbons, a district attorney spokeswoman, said in a prepared statement there was insufficient evidence to prove a crime had occurred. The statement did not elaborate.
Berndt denied the allegation at the time.
The disclosure marked the latest twist in the strange case against Berndt, who taught at Miramonte for more than 30 years before being fired a year ago.
Berndt, 61, remained jailed on $23 million bail on felony charges that he committed lewd acts on 23 boys and girls, ages 6 to 10, between 2005 and 2010. He could face multiple life sentences if convicted.
Angry parents confronted school officials on Wednesday, questioning why they weren't told for a year that the former teacher was suspected of photographing children in class for sexual thrills.
Berndt was removed from classwork in January 2011 and fired within the month, but only parents of children identified as victims were told by authorities at that time of the investigation.
School officials and investigators said proper procedures were followed to prevent anything that might harm efforts to investigate and build a case against the teacher.
"That's cool and fine but the detectives' children don't go here," said Cheremoya Dupree, 38, whose two children attend the school and were not victims. "I want them to tell the truth ... because I don't think we got that."
Miramonte Principal Martin Sandoval told reporters that he followed proper school district procedure.
Meanwhile, two women who said they were former students of Berndt told the Los Angeles Times that complaints were made about Berndt's odd behavior as far back as 1990.
Marlene Trujillo, 30, said she and two other fourth-grade classmates told a school counselor that Berndt often moved his hands under his desk, near his lap, at the front of the classroom. She and other students also had seen a jar of Vaseline in one of his desk compartments.
Trujillo said the counselor "just told us it's not very good to make stories up. She said it was our imagination. It was never talked about again."
Los Angeles Unified School District Supt. John Deasy told the Times he was struggling to determine how the alleged behavior went undetected for so long.
"How do I make sense out of the fact that this took place over a number of years and no one seemed to know about that?" Deasy said. "I'm definitely trying to understand how someone could not have known."
Using a cheap camera, Berndt is suspected of snapping nearly 400 photographs of Miramonte students, some with a giant Madagascar cockroach from a classroom terrarium on their faces.
Others were blindfolded or had clear tape over their mouths, and some were shown with a spoonful of milky liquid placed near their lips, Scott said.
The photo sessions were treated as a game and some children were given sperm-laced cookies to eat as treats, Scott said.
The investigation began in the fall of 2010 when a film processor became suspicious about the photographs and turned them over to Redondo Beach police, who on Dec. 2, 2010, handed them over to the Sheriff's Department, Scott said.
Investigators began trying to track down the children, but learned the year-round school was on break until Jan. 3, 2011, Scott said.
On that day, investigators went to the class, where Berndt refused to be questioned without an attorney, Scott said.
An investigator then found a blue spoon apparently hidden in a trash can that appeared to be the one seen in the photographs, but it took months before analysis determined there was semen on the spoon and more time before DNA testing matched it to Berndt, authorities said.