Franco issued a statement saying he canceled his June 12 appearance because of conflicts with preproduction demands for his next film.
However, the "Pineapple Express" star had been the object of opposition from students who said he was not the right fit for the commencement speech.
"The problem with him as a speaker comes down to the fact he was a peer for so many of us," UCLA senior Erin Moore said. "He was in our class. He's not a role model. And he hasn't had time to accomplish anything with his degree."
Franco, 31, enrolled at UCLA in 1996 and graduated last year with a degree in creative writing. He would have been the youngest person and most recent graduate to deliver a commencement speech at UCLA.
Soon after the commencement announcement in March, Moore set up a Facebook page called "UCLA Students Against James Franco as Commencement Speaker." Hundreds joined, and Moore estimated about 80 percent of them are UCLA students.
Representatives of Franco and UCLA did not immediately respond to messages seeking comment early Saturday.
Franco is perhaps best known for his supporting role in the "Spider-Man" films.
He is preparing for the comedy "Your Highness," which is set to begin filming next month. Amanda Lundberg, a spokeswoman for the producer of the film, said Franco would be on the set in Ireland on June 12.
UCLA officials have yet to announce a replacement.
Information from: Los Angeles Times, http://www.latimes.com/