US actor Jussie Smollett staged a fake attack on himself because he was "dissatisfied with his salary", according to Chicago Police.
Police Superintendent Eddie Johnson said in a news conference that he "took advantage of the pain and anger of racism to promote his career".
Mr Smollett is charged with filing a false police report after he said he was the victim of a homophobic attack.
Police say he also had sent a racist letter to himself at a Fox studio.
The 36-year-old actor is suspected of paying two Nigerian brothers to stage the attack. They are both co-operating with the investigation, police say.
On Wednesday his lawyers said they would "mount an aggressive defence".
What do police say?
In a scathing news conference on Thursday, Supt Johnson said the actor committed a crime "to further his own profile".
He said Mr Smollett had betrayed the city of Chicago, and said "this publicity stunt was a scar that Chicago didn't earn and certainly didn't deserve.
The "hoax", he said, "received national attention for weeks," and may deter future hate crime victims from coming forward for fear that their allegations may be met with scepticism.
He called upon the actor "to apologise to this city that he smeared".
"Celebrities, news commentators, and even presidential candidates weighed in on something that was choreographed by an actor," he said, with palpable anger as he spoke.
"I'm left hanging my head and asking why," he said, describing Mr Smollett's actions as a "slap in the face" to Chicagoans.
Suspicion over the actor's claim started to grow after police said they could not find any video footage of the alleged incident from surveillance cameras. There were also no witnesses.
But investigators managed to track and identify two men who appeared on video footage near where the actor said he had been attacked through a ride-sharing app.
The men - Ola and Abel Osundairo - had left the US following the alleged attack and were held for nearly 48 hours after they returned last week.
They were released without charges after providing information that "shifted the trajectory of the investigation", police said.
One of the brothers is Mr Smollett's personal trainer and both have worked as extras on Empire.
Police say they have a cheque that Mr Smollett signed and that he had agreed to pay $3,500 (£2,700) for their participation.
Supt Johnson said that he had told at least one of the brothers that he was "dissatisfied" with his salary from Fox.
He added that Mr Smollett first "attempted to gain attention by sending a false letter that relied on racial, homophobic and political language" to Fox studios.
One day earlier, Fox released a statement supporting Mr Smollett, calling him a "consummate professional on set," and insisting that he was not being "written out of" Empire.
On Wednesday, CBS Chicago obtained footage which appeared to show two people buying materials, including ski masks, that had allegedly been worn by the actor's attackers.
Mr Smollett turned himself in early on Thursday and is in custody of Chicago police.
He will appear before a judge for a bond hearing later on Thursday.
What does Smollett say happened?
The actor, who is gay, said he had gone out to buy food late at night in downtown Chicago when two white men hurled racial and homophobic insults at him.
They allegedly punched the actor, poured a chemical substance over him and put a rope around his neck.
Police said on Thursday that some minor scrapes on his face were probably self-inflicted.
"I'm left hanging my head and asking why. Why would anyone, especially an African-American man, use the symbolism of a noose to make false accusations?" said Supt Johnson.
"How could someone look at the hatred and suffering associated with that symbol and see an opportunity to manipulate that symbol to further his own public profile?"
Mr Smollett also claimed the men had told him "this is Maga country", apparently referring to President Donald Trump's "Make America Great Again" slogan.
The president tweeted his condemnation after the police news conference, slamming Mr Smollett's "racist and dangerous comments".
In a tearful interview with ABC News during the investigation, he claimed to have fought back against his attackers.
The actor said he had been "forever changed" by the alleged incident. An outpouring of support followed, including from Oscar winner Viola Davis and supermodel Naomi Campbell.