The singer and actress was recently rumoured to be in the running for the position along with Steven Tyler and was even endorsed by ex-Idol bandleader Rickey Minor.
However, a source told People that Lopez's high-maintenance demands have turned producers off to the idea.
"Her demands got out of hand. Fox had just had enough," the insider said.
Ryan Seacrest recently revealed that the new judges lineup may not be announced for several weeks.