The 24-year-old who faces upto five years in prison if it is proved that she stole a USD 2500 necklace, was warned by the judge that she will face jail if she committed any crime, no matter how small, before her next hearing on February 23, reported TMZ.
Superior Court Judge Keith Schwartz told the star, "If you violate the law I will remand you and set no bail. Look around this room. Everybody else has to follow the law. You`re no different than anyone else. So please, don`t push your luck."
Wearing a fitting white mini and black heels Lohan, looked composed throughout the hearing, despite being mobbed by paparazzi during her arrival.
The LA County District Attorney`s Office formally announced the charges this morning, ahead of the actress`appearance in court.
Lohan was still on probation for a 2007 drink-driving offence when she carried out the alleged theft.
But unlike her previous indiscretions the charge is Lohan`s first felony crime, which led the judge to give her a special warning.
"You`re on a different situation now that a felony has been filed against you," said the judge.
The `Mean Girls` star was then taken into custody and formally booked for the offence, with a mug shot taken.
Her bail was set at USD 40,000, USD 20,000 for the probation violation, dating back to her 2007 arrest, with another USD 20,000 for the alleged theft.
Her lawyer Shawn Chapman Holley said she was ready to pay the bail.
The necklace in question was taken from a store in Venice, California, last month but was returned to police last Wednesday by Lindsay`s stylist.
According to reports, the actress was seen wearing the necklace days after the Kamofie and Company jewellery store had reported it stolen to the Los Angeles Police Department.
This is not the first time that Lohan is facing a theft accusation.
In 2008, she was accused of stealing a USD 12,000 mink coat from a NYC nightclub. And in 2009, she was suspected of taking a USD 400,000 necklace from an Elle Magazine photo shoot.
And just last year she was accused of taking a USD 35,000 Rolex from a `friend`.