The Hollywood star has become the public face for soda-maker SodaStream and is due to appear in an advert for the company that is set to air during the Super Bowl on Sunday.
However, the multi-million dollar deal has caused a backlash amongst activists and humanitarian groups because SodaStream's largest factory is based in a Jewish settlement in the occupied West Bank.
The company employs both Palestinian and Israeli workers and says its plant offers a model of peaceful cooperation, but settlements are deemed illegal under international law and are condemned by Oxfam, which has a large operation in the region.
After consultations with Johansson earlier in the week, the actress informed the charity that she would end her relationship with them.
"Oxfam has accepted Scarlett Johansson's decision to step down," the group said in a statement. "Johansson's role promoting the company SodaStream is incompatible with her role as an Oxfam Global Ambassador."
"Oxfam believes that businesses, such as SodaStream, that operate in settlements further the ongoing poverty and denial of rights of the Palestinian communities that we work to support."
The controversy has come at a delicate time for US-backed peace talks between Israel and the Palestinians. Israeli officials fear that if the talks fail, a nascent call for an economic boycott of Israel and its settlements might grow.
In a statement reported in the American media, Johansson's spokesperson wrote that "she and Oxfam have a fundamental difference of opinion in regards to the boycott, divestment and sanctions movement".
That movement, sponsored mostly by pro-Palestinian intellectuals and bloggers, advocates for a blanket boycott of all Israeli goods and questions the state's legitimacy.
There is a different consensus among international rights groups like Oxfam, however, which discourages trade only with Israeli firms located on land in the occupied West Bank.
"The very existence of (Israeli settlements) amounts to a serious violation of international law," the New York-based Human Rights Watch said in a statement on Wednesday.
"It is impossible to ignore the Israeli system of unlawful discrimination, land confiscation, natural resource theft, and forced displacement of Palestinians in the occupied West Bank, where SodaStream is located," the rights group added.
Johansson was named as an Oxfam ambassador in 2007 and has taken part in a number of its global campaigns.
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@Does It Really Matter:
There is far more good done by the materialists than humanitarians. May I interest you in reading some history. Excellent history of World GDP from Angus Madison. Great work on affluence and happiness by Diane Ravitch, Betsy Stevenson, Justin Wolfers, Carmen Reinhart and Kenneth Rogoff. Work by William Easterly, Paul Collier, Abhijit Bannerjee, Esther Duflo and Jagjit Bhagvati on development and happiness. Please tell me what these people missed.
@cs: It's shameful to think in that manner considering the context of this issue. I'm sure many would agree that it is much better to be an advocate for a humanitarian cause than a puppet for a material one.
@Yasir Jamal: Money can and does buy peace. Happiness? It's easier to be happy on a full stomach than on an empty one.
In the end, its all about money. People need to understand that money cant buy peace and happiness!