The "Mean Girls" actress, 25, plans to ring in 2012 quietly at home, TMZ reported.
Lohan's spokesman Steve Honig told TMZ, "Lindsay is not going to Dubai, nor had she ever considered doing so. She will be spending New Year's Eve in Los Angeles with a few close friends and family."
Dubai media carried reports this week saying that Lohan will be one of the VIP guests on board the QE2, which is docked in Dubai, for the biggest New Year's Eve party in town.
The famous former Cunard transatlantic liner, which ferried 2.5 million passengers during more than 800 crossings, is now owned by Dubai investment firm Istithmar and moored at the emirate's Port Rashid. Plans to convert the ship into a luxury floating hotel were ditched as a result of the 2008 recession, and her future remains uncertain.
Emirati newspaper The National reported Monday that tickets for the party, priced at 3,000 dirhams ($800) each, were being sold to global A-listers -- and that Lohan was one of the "confirmed names" on the guest list. The paper added that the glamorous affair was being organized by Dubai-based Global Event Management.
Emirates 24/7 also reported Wednesday that Lohan was among the "VIP and celebrity attendees who will grace the occasion," among other actors and sports stars.
Lohan was furious when she found out that her name was being used to promote the event, sources told TMZ.
The troubled star, who recently posed nude for the cover of Playboy, could have commanded a six-figure sum for New Year's Eve appearances, according to TMZ. But she is still in the process of completing 480 hours of community service as part of her probation for stealing a necklace, as well as a 2007 DUI case, and wants to change her party-girl image to stay on the right side of her judge.
Lohan's legal team was writing a cease and desist letter ordering the party planners to stop spreading false rumors about her New Year's Eve plans or face legal action, the report said, adding that the party planners did not respond to a request for a comment.
Lohan is due to appear in court Jan. 17 for a probation progress report.