According to reports, the officer initially approached LaBeouf and his pals because they were jaywalking in Austin, Texas, on Friday.
The officer noticed Shia was slurring and smelled of alcohol, and the star suggested the cop let him go because ‘they had killed a friend of his.’
When he failed to get away, Shia then claimed he was a member of the military, before barking ‘Do whatever the f*** you gotta do!’
The police officer then arrested him for public intoxication.
Shia reportedly also called the officer a ‘silly man’ for intervening, before threatening an onlooker who had begun filming the scene on his mobile phone.
The star has now been released from police custody.
LaBeouf spent a stint in rehab in the summer of 2014, after he was arrested for disorderly conduct - where he spat at a police officer and used obscene language.
Earlier this summer, the star also made headlines when footage leaked of him fighting with then girlfriend Mia Goth - where he is seen telling onlookers that he ‘would have killed her.’