The chief announced his decision after at least two groups decided to withdraw their pledges to the fund, the Los Angeles Times reported.
Dozens of people and agencies had donated $1.2 million for the capture and conviction of Christopher Dorner, who is alleged to have killed two police officers and a police officer's daughter and her fiance in revenge for his dismissal from the LAPD.
Dorner killed himself after a shootout with authorities who tracked him to a cabin in the San Bernardino Mountains.
Two parties who encountered Dorner as he fled police have claimed the reward, but some donors have decided to withdraw their contributions to the reward fund, saying the claims don't meet the required criteria.
Ron Cottingham, president of the Peace Officers Research Association of California, said his group pulled its money because the pledge was based on "very specific information and criteria."
The city of Riverside has withdrawn its pledge, and others among the approximately two dozen donors are considering doing the same.
City officials say the reward should be paid even though Dorner was not brought to trial.