The Blind Side star was in talks to portray mean orphanage boss Miss Hannigan alongside, young Oscar nominee Quvenzhane Wallis, but negotiations have fallen through, according to TheWrap.com.
It was Sony executives' second attempt to sign Bullock to the film - she also turned down the role in March (13).
They are now on the hunt for a suitable replacement to fill the role made famous by Carol Burnett in the beloved 1982 film, and more recently portrayed on Broadway by Glee star Jane Lynch.
Jamie Foxx has already been cast as billionaire Benjamin Stacks, a modern take on the musical's Daddy Warbucks character, in the project, which will be produced by Will Smith and rap mogul Jay Z.
Smith's actress daughter Willow had previously been cast as Annie but she pulled out of the project earlier this year (13).