Mohammad Suleiman was born with Down Syndrome and he has intellectual difficulties, according to his father.
He said his son's regular teacher in an elementary school left and a substitute teacher called police in Pearland, around 20 miles south of Houston, in Texas, about his son.
The teacher also said the school told the officer that Mohammad could talk.
Disgusted by the allegations, Mohammad's father said his son did not speak at all and had the mental capacity of a one year-old, The Independent reported.
"They claim that he's a terrorist. This is so stupid, this is discrimination actually. It's not implied discrimination, it's a hundred per cent discrimination," the father said.
The Pearland Police Department said it has concluded its investigation and found no further action was needed.
However, the region's Child Protective Services department said its investigation was ongoing.