Murphy's decision to bow out of the telecast came a day after his "Tower Heist" director Brett Ratner resigned as the ceremony's producer, following criticism he received for making a homophobic remark during a public question and answer session for the big-screen comedy.
Ratner later apologized for saying "rehearsal is for fags," but his critics still called for him to be ousted as Oscar producer.
"First and foremost, I want to say that I completely understand and support each party's decision with regard to a change of producers for this year's Academy Awards ceremony," Murphy said in a statement Wednesday. "I was truly looking forward to being a part of the show that our production team and writers were just starting to develop, but I'm sure that the new production team and host will do an equally great job."
Academy of Motion Picture Arts and Sciences President Tom Sherak said he appreciates how Murphy feels about losing his creative partner.
"We all wish him well," Sherak said in a statement.
Academy Awards for outstanding film achievements of 2011 will be presented Feb. 26 at the Kodak Theatre in Hollywood and televised live by ABC-TV.