Pacino, best known for playing Michael Corleone in The Godfather films and Tony Montana in Scarface, had signed up to be the narrator in the play, which was scheduled to premier at the Bergen International Festival in May 2017.
It would then go on to play at Copenhagen's Aveny-T theatre and at Aarhus Theatre.
"It is correct, he jumped at the last moment because he couldn't come to terms with Knut Hamsun's support for the German occupiers and Nazism. We must respect that,” Jon Stephensen, Aveny-T's manager, told BT.
Hamsun was a pioneer of psychological literature and an influence on writers as diverse as Franz Kafka and Ernest Hemingway.
However, during the Germany occupation of Norway, he became a firm supporter of the German war-effort, getting to know many of the highest ranking German officers, including Joseph Goebbels.
After Hitler's death he published an obituary in which he described the German leader as "a preacher of the gospel of justice for all nations”.
Aveny-T aimed to film Pacino in 3D over a day and then use the footage to project him onto the stage.
"It would have been really been great if it had succeeded,” Stephensen said. “I have several times in the process thought that I was dreaming. It would have been massive if he had come to Copenhagen.”
Hamsun was already 80 years old when the Nazi's invaded Norway, something his supporters say should be taken into consideration when condemning him for his approach to the Nazis.