Buchanan told the COI management board at its meeting on Wednesday that he would not be applying for the chief executive's post. He told Campaign his decision had been made for "personal reasons" but did not elaborate.
"I want to stop any further speculation about my position because it was unsettling for staff. I am looking forward to working with the new chief executive," he said.
Buchanan has been the acting chief executive since Fisher's departure in July and was believed to be one of the front runners for the top job.
Ministers hope to attract a successful private sector applicant. To make the COI job more attractive, the Government has made it a permanent civil service post with a pension and raised the salary to £120,000. Whitehall officials admit the pay gap might deter advertising heavyweights.