Bill Forsyth has declared he will boycott the musical’s opening in Edinburgh later this month.
The 72-year-old claims he has been told he should “cease to be actively involved” in the new project after spending the past three years collaborating alongside playwright David Greig.
Forsyth confirmed to The Times he had broken off all communications with the producers, which includes Mr Greig and director John Crowley.
The film director said he had been left in state of shock at being cut off from the project.
“It’s not a show I’ll be able to see,” Forsyth told the national newspaper.
“It is sad, but they tried to turn me into an editor – ‘turn up and you can have your little say, but you’re not going to be creatively involved’.”
The show is the first time Local Hero has been adapted for the stage.
Dire Straits legend Mark Knopfler has create new music for the reimagining of Local Hero.
First released in 1983, the original film tells the story of an American oil company representative who is sent to the fictional village of Ferness on the west coast of Scotland to purchase the town and surrounding property for his company.
Forsyth won the 1984 Bafta award for best direction for his work on the film.
The stage show’s opening is at the Lyceum Theatre in Edinburgh on 23 March, but Forsyth said he would not be going.
He said he had not been involved since the decision was made last year to drop him from the creative team, claiming he had only received one email since from Mr Greig.
“What he said was, I should stop working on the musical and not be involved in any more workshops,” Forsyth said.
“He said ‘you can turn up with the execs and play an editorial part at the end of the process’, which I didn’t take to at all.
“They wanted me to step back, be a good boy and keep smiling. I left in a state of shock.”
Greig told The Times he was “very sad” to hear Forsyth’s claims of being excluded from the process.
“I will immediately be getting in contact,” he said.
“We were expecting Bill to come to previews and to be offering thoughts and notes and very much looking forward to welcoming him to the show.
“I can’t stress enough that there’s so much of him in it, not just the original.
“He was a deep part of the drafting of the stage show.”