Action For Independence (AFI), initially formed under the name Alliance for Independence last summer, confirmed the move in a bid to put “Scotland before Party”.
It came just 12 hours after the party announced its list candidates for the May 6 vote.
Mr Salmond launched the Alba Party on Friday afternoon and said he would be standing on the North East regional list section.
A statement from the group late on Friday said: “The National Executive of Action for Independence has agreed to stand down its 42 candidates in the forthcoming election on the 6th May following the launch of Alex Salmond’s ‘list only’ Alba party today.
“AFI is gratified that its concept of Max the Yes and the building of a supermajority of independence supporting MSPs has been taken up by such a highly credible party with such influential leadership.
“The Alba Party is to all intents and purposes ‘AFI 2’ and we note that the ideas, slogans and Max the Yes concept it employs were all spawned by AFI.
“AFI’s members were right in pursuing the Max the Yes concept and they should all be proud of the part they have played in paving the way for an independence supermajority.
“AFI thanks all of our members, candidates and branches for the amazing work they have done in bringing the Max the Yes concept to the fore in Scottish politics and looks forward to an overwhelming pro-independence majority on the 6th of May.
“AFI’s aim has always been to unite the Yes family on the regional lists and we are confident that the Alba Party, with the help of AFI’s members, will succeed in doing that.”