I believe the author left it up to interpretation, as I didn't find an "official" answer on the web.
There's a FAQ on IMDB about a similar question, though the answer doesn't source anything.
What is the meaning of "Chinatown" and the last line of the movie?
As a young man, Jake was a police officer in Chinatown. He once tried to protect a woman, but as a direct result of his intervention, she was "hurt" (an implication that the woman died). As a result, Jake became cynical and apathetic. Over the course of his investigation in the film, Jake again tries to protect a woman, and once again, she is killed as a direct result of his intervention."Forget it, Jake; it's Chinatown" is an encouragement to Jake to forget this set of circumstances, just as he "forgot" the circumstances surrounding his time in Chinatown. The dramatic irony of this is that the viewer knows that Jake has never forgotten what happened in Chinatown, and that he will probably never forget the events depicted in the movie, inevitably leading to him becoming even more cynical and apathetic than he was already.
I think the line is a simple reaction to tragedy. What can you do to carry on but "forget" (and possibly forgive yourself)?
More importantly, what does the line mean to you? That interpretation is just as valid as any.