The news comes after the movie was delayed by financial problems at movie studio MGM. Reports suggest that the director, celebrated for movies including the Hellboy series and 2006's fantastic Pan's Labyrinth, couldn't commit to staying in New Zealand any longer.
In a statement released to official Lord Of The Rings site, TheOneRing.net, del Toro explained: "In light of ongoing delays in the setting of a start date for filming The Hobbit, I am faced with the hardest decision of my life. After nearly two years of living, breathing and designing a world as rich as Tolkien's Middle Earth, I must, with great regret, take leave from helming these wonderful pictures.
"I remain grateful to Peter, Fran and Philippa Boyens, New Line and Warner Brothers and to all my crew in New Zealand. I've been privileged to work in one of the greatest countries on earth with some of the best people ever in our craft and my life will be forever changed."
A statement from producer Peter Jackson read: "We feel very sad to see Guillermo leave the Hobbit. But he has kept us fully in the loop and we understand how the protracted development time on these two films, due to reasons beyond anyone's control, has compromised his commitment to other long term projects.
"The bottom line is that Guillermo just didn't feel he could commit six years to living in New Zealand, exclusively making these films, when his original commitment was for three years. Guillermo is one of the most remarkable creative spirits I've ever encountered and it has been a complete joy working with him."
Jackson confirmed that Del Toro will continue to co-write the screenplays, while speculation about the films' new director has already begun. In an interview with New Zealand's Dominion Post, Jackson revealed that he is currently exploring options to save the film even though it may put his other projects at risk. "If that's what I have to do to protect Warner Bros' investment, then obviously that's one angle which I'll explore," he said.
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