The sexy star will not be playing Shia LaBeouf's love interest in the second sequel, according to Paramount Pictures insiders.
The news comes after Fox slammed director Bay and revealed he was a "nightmare to work for" and "hopelessly awkward" in 2009 interviews.
Fox was not popular on the set of the blockbuster - she had to reach out to crew members last year (09) after they branded her "dumb" and "ungracious".
An open letter from three unnamed Transformers workers surfaced on the internet in September (09), hitting out at Fox after she criticised Bay.
The unnamed crewmembers claimed Fox was "about as ungracious a person as you can ever fathom," adding that the brunette beauty "shows little interest in the crew members around her."
They added, "We work to make her look good in every way, but she's absolutely never appreciative of anyone's hard work."
Bay proceeded to defend the 23 year old against the allegations, telling fans he didn't "condone" the crew's letter to the star - and then Fox herself reached out to her disgruntled colleagues.
In a statement she said, "I have spoken with the parties involved privately. I am very fortunate to be involved in this amazing franchise and look forward to Transformers 3."