Paul Smith, an executive producer on the 2008 box office smash, owns the screen rights and plans to go ahead without him despite supposed protestations from the original creative team.
The New York Post reports that Boyle left the project after Smith's refusal to guarantee him a role as director.
The film's scriptwriter Simon Beaufoy and composer AR Rahman have allegedly declined to be involved in an adaptation that doesn't involve Boyle, with Rahman blocking use of his Oscar-winning song 'Jai Ho'.
Sources claim: "There is an artistic picket line forming because people are surprised [Paul] would do this to Danny.
"The position has been clear for some time that everyone wants to be involved together, or not at all."
Smith has recruited Downton Abbey creator Julian Fellowes to take over creative duties.
This summer sees Boyle bring his acclaimed stage adaptation of Frankenstein to the US, before overseeing the Olympic opening ceremony in August in his role as artistic director.
Watch the Slumdog Millionaire trailer below: