Indy organizers had asked Trump last month to drive the pace car at this year's event, sparking a movement on Facebook to get the billionaire booted. The page had thousands of supporters, all upset at Trump for questioning President Barack Obama's birthplace.
Trump said he decided against partaking in the event because he felt it was "inappropriate" since "he may be announcing shortly his intention" to run for president. He also said it would be impossible to fulfill the required practice sessions that occur late in race week because of his busy schedule.
A replacement is expected to be named later this month. The race is scheduled for May 29.
The Associated Press contributed to this report.