The Mean Girls star, who is on parole for a 2007 DUI charge, is facing trial over allegations she stole a $2,500 (£1,670) necklace from California jewellery store Kamofie & Co. in January (11). She was subsequently charged with felony theft.
Lohan appeared at Los Angeles Superior Court for a preliminary hearing on Friday (22Apr11). Judge Stephanie Sautner reduced the count to a misdemeanour, to which the actress pleaded not guilty.
However, Judge Sautner decided the accusation amounted to a parole violation and ordered Lohan to serve 120 days in jail - her fourth stint behind bars.
The actress' lawyer, Shawn Holley, had earlier filed a motion for complete dismissal of the case, but the request was rejected. She moved for an appeal immediately after sentencing, paving the way for the troubled star to be bailed.
Lohan was booked into Lynwood Correctional Facility late on Friday, but the 24 year old was a free woman again just five hours later when a bondsman posted her $75,000 (£46,875) bail.
During Friday's hearing, Deputy District Attorney Danette Meyers presented four potential witnesses to the court to give testimony, including jewellery store owner Sofia Kaman.
The prosecutor also showed surveillance footage from the store on the day of the alleged crime and argued Lohan appeared to intentionally take the necklace, using her friend Patrick as a distraction.
Judge Sautner agreed after viewing the footage for the first time, and had some harsh words for Lohan.
She said, "Would a person with any brains walk out with a necklace with (security) cameras on? Maybe it's brazenness, stupidity - I don't know what. Perhaps it was a desire to hide in plain sight."
The judge went on to order Lohan to complete 480 hours of community service, split between a women's shelter and the Los Angeles County morgue.
Lohan did not address the court during the hearing and failed to react to the jail sentence, although she cried earlier in the day as Holley claimed her client had been punished enough.
The actress will return to court on 11 May (11) for a pretrial hearing and the trial will kick off on 3 June (11).
Lohan's latest legal trouble is bad timing for her career - this week (ends22Apr11), it was announced the star will join John Travolta's biopic about crime boss John Gotti as his daughter-in-law Kim.
The deal for Gotti: Three Generations is part of a two-picture agreement with Fiore Films. It is not currently known how her looming legal issues will affect production on the movie, which is due to begin this summer (11).