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4:17 p.m. | Updated

The board of the American International Group has declined to join a lawsuit against the federal government over its $182 billion taxpayer-financed bailout, the company said on Wednesday.

The decision follows a public uproar over the possibility that A.I.G. would sue the same authorities that rescued it during the financial crisis. The board had been weighing whether to join a $25 billion lawsuit filed by its former chief executive, Maurice R. Greenberg, on behalf of shareholders, arguing that they lost tens of billions of dollars when the government attached onerous terms to the bailout.

The insurer's board met on Wednesday, listening to presentations from Mr. Greenberg's lawyers, as well as from representatives of the Treasury Department and the Federal Reserve Bank of New York, the defendants in the lawsuit. The government felt that the claims were frivolous, arguing that the company's alternative was bankruptcy.

After the meeting, which lasted all morning, the board voted to steer clear of the case. It also opted to ask Mr. Greenberg to stop pursuing legal claims in the company's name.

"In considering and ultimately refusing the demand before us, the board of directors properly and fully executed our fiduciary and legal obligations to A.I.G. and its shareholders," Robert S. Miller, A.I.G.'s chairman, said in a statement.

The decision on Wednesday ends more than a year of suspense over what A.I.G. would do. Starr Investment, a company run by Mr. Greenberg, filed the case in late 2011 in federal courts in Washington and New York, and has long pressured the company to join.

The board's vote deals a blow to Mr. Greenberg's case, which had already been dismissed in the Federal District Court for the Southern District of New York. That decision is under review by the federal Court of Appeals for the Second Circuit, though the judge in the Court of Federal Claims in Washington declined to dismiss the case.

A.I.G. directors faced a difficult choice. Joining the case would have added to public outrage over the company's bailout, one of the biggest and most controversial of the crisis. Lawmakers in recent days have warned the company not to side with Mr. Greenberg, which would make it "the poster company for corporate ingratitude and chutzpah."

The meeting coincided with an aggressive advertising campaign by the company thanking taxpayers for rescuing it during the crisis. And it comes only weeks after the insurer fully repaid its bailout, generating about $22 billion in profit for the public.

Mr. Miller reiterated the company's gratitude for the bailout.

"America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us, and deliver a profit to those who put their trust in us," he said. "We continue to thank America for its support."

But the members of A.I.G.'s board, most of whom joined after the rescue effort, owed a duty to shareholders to consider the lawsuit. Mr. Greenberg could challenge the decision to abstain as failing to fulfill legal obligations to investors.

Still, corporate law afforded the board leeway in deciding whether to pursue the case.

David Boies, the prominent trial lawyer representing Mr. Greenberg, said in a statement: "We continue to believe that the attempt by the A.I.G. board to prevent Starr International from pursing claims on behalf of A.I.G. shareholders is contrary to the shareholders' interests."