Collymore, 46, expressed an interest in the role at a meeting with Forest owner Fawaz Al Hasawi on Tuesday.
But after "time to reflect" on the meeting and feedback from fans, he has now "withdrawn from any involvement".
He had said: "I'm not convinced change will happen quickly or thoroughly enough under Fawaz's ownership."
But following his decision to withdraw his interest, he explained: "As for fans which questioned my motive, I want the club to be in safe hands, competitive and in the top division.
"My current business, career and health are way more important to me than pushing against a tide of doubt, spite and rabble rousing, so I'll stick to the odd Q&A in Nottingham now and again to say hello to those who supported me back in the day."
Collymore was involved in a protest against Al Hasawi on 21 January, which followed the collapse of a proposed takeover of the club by a US-based consortium led by John Jay Moores.
"I believe Fawaz will stay in the short/medium term," Collymore wrote on his blog.
"Unless JJM [Moores] meet the asking price of £50m or as Fawaz said "the Chinese offer silly money", it is my belief that he feels he has the resources, passion and plan to move the club forward."
Forest are currently 19th in the Championship, just five points above the relegation zone.
They sacked manager Philippe Montanier on 14 January, making the Frenchman the seventh to leave the City Ground since the Al Hasawi family took over in July 2012.
Meanwhile, the Nottingham Forest Supporters' Trust have been given an assurance by the city council that the land on which the City Ground is built will never be sold.
The stadium is owned by the club, but the land still belongs to the council.
The Supporters' Trust have also applied to register the City Ground as an Asset of Community Value, meaning they would have first refusal to purchase the stadium if it were ever to be sold, with six months to raise the required funds.
"This is a key safeguarding measure for the future of our football club," a spokesperson said.
"With our membership now live and having already seen hundreds of members join up, we have a huge wealth of skills to call upon to continue to push further initiatives forward."
Former Nottingham Forest striker Stan Collymore says he is no longer interested in a role as sporting director at the Championship club.