The 33-year-old had been set to play Christian Grey in the highly anticipated film adaptation of E L James' erotic best seller.
However, the English actor said his busy schedule prevented him continuing in the role, which he initially turned down because of timing issues.
In a statement, Universal Pictures said Hunnam's withdrawal was a mutual decision, adding that the time the actor had to prepare for the film had been limited by his television work.
Hunnam is best known for his role as Nathan Maloney in the sexually explicit Channel 4 mini-series Queer as Folk but also played Pete Dunham in Green Street, a film about football hooliganism.
Last month, he said he was "very excited and honoured to be entrusted with bringing (Grey's) incredible character to life".
Hunnam said he was not fazed by the film's inevitable sex scenes, adding: "I've always been historically fairly fearless about sexuality in film."
The actor had been due to star alongside 23-year-old Dakota Johnson, who will play Anastasia Steele in the film.
Fifty Shades of Grey will be directed by Sam Taylor-Johnson and is due for release in 2014.
It is not yet known who will replace Hunnam.
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