Psy -- I Won't Sue 'Gangnam Style' Restaurant for Jacking My Pstyle

"Gangnam Style" singer Psy will NOT sue an L.A. restaurant for naming itself after the famous song -- in fact, Psy's pumped ... because as far as he's concerned ... imitation is the sincerest form of flattery.

The Koreatown restaurant was previously known as Soju Town -- but it re-opened last month after a brief closure under its new name "Gangnam Style," clearly an homage to the popular song.

The restaurant never bothered to get Psy's permission to use the name -- but sources close to the singer tell TMZ, he doesn't give a crap ... because where he comes from, imitation is a form of honor.

We're told Psy's team briefly considered legal action when they caught wind of the new restaurant, but since Psy doesn't care ... they don't plan to pursue anything.