Malcolm McDowell was due to talk about his career during a special appearance at the event next week, as well as unveil his latest film, Bereave, with co-star Jane Seymour.
But the festival had been under pressure to pull the plug on the “in person” event over the unpaid wages which are still due to the former crew of the ill-fated Monster Butler film, about a Scottish serial killer.
McDowell, who was due to star in the film along with Gary Oldman, was also one of the producers, and was said to have personally assured the crew that they would be paid when financial problems became clear.
Trade union Bectu had accused the festival of a “significant lack of sensitivity” towards the film community in Scotland by lining up his special event at the Traverse Theatre and said it would have been “grossly insulting” for McDowell to return to Scotland to promote another film.
The 72-year-old had earlier insisted he was not responsible for the “Monster Butler disaster”, as he described it, saying he was “shocked and disappointed” that the blame was being pinned on him.
However, in a statement from the festival announcing the cancellation, McDowell said: “I truly regret all that has happened, and in the best interest of our film, Bereave, I think it’s best for all those involved that I do not attend the Edinburgh International Film Festival at this time.”
He added: “This has been a very difficult decision, but the emphasis should be on Bereave, and nothing else but this film. I thank the festival for their understanding.”
The festival said Seymour was still due to attend the premiere of Bereave and appear in her own in person event on 27 June.
Paul McManus, Scottish organiser of Bectu, said: “Naturally we are very grateful that Malcolm McDowell has acquiesced to our invitation to withdraw from the festival. It was the appropriate thing for him to do.
“I will now be writing to him to give him an open invitation to meet with us and some of the affected crew members to try and build bridges. I think it is important to deal with the ill-feeling that is still there over what happened.”