The green-cab driver involved in a deadly hit-and-run in Queens was released without charges — after telling authorities he lost control of his car when it malfunctioned, law enforcement sources said Monday.

Police freed the 55-year-old driver from custody Sunday night, just hours after he fatally ran over 26-year-old Sherena Hundalani as she walked on the sidewalk a half-mile from her Rego Park home.

The victim worked as the floor manager at her father’s Mexican restaurant, the Mamasita Bar & Grill in Hell’s Kitchen — where customers included actress Priyanka Chopra.

The cabbie, whose name hasn’t been released by cops, was pulling out of a gas station at the intersection of 63rd Drive and Queens Boulevard around 4 p.m. when he rammed into Hundalani, police said.

After hitting the young woman, the motorist just kept going until witnesses chased him down more than a block away, at the intersection of 62nd Drive and Junction Boulevard, police said.

A witness told CBS New York that he was the one who stopped the runaway driver — by snatching away his keys.

“I was scared, to be honest. I didn’t know what was on his mind, what he was going to do,” the man said. “I knock, he opened the window, and I just took out the key.”

During questioning, the driver told authorities he wasn’t able to stop his 2005 Lincoln Town Car after it suffered mechanical failure, law enforcement sources said.

Police said they are still investigating the crash.

Hundalani was treated on the scene but pronounced dead at Elmhurst Hospital Center.

“She took care of everybody at the restaurant,” her father, Prakash Hundalani, told The Post on Monday.

“She was a beautiful daughter. She loved everybody.”

Just three weeks ago, the proud dad posted a photo of his daughter with Chopra, who had stopped by the eatery.

The grieving dad said he was a “proud father,” before breaking down in tears.

Asked about the driver’s release, Hundalani said the family hasn’t been privy to what is going on with the investigation and is focused on planning Sherena’s funeral.

Additional reporting by Tamar Lapin