Bob Moog, who was to join Toysrus.com as its CEO, "has been unable to extricate himself from his responsibilities as founder and CEO of University Games," Toys "R" Us said in a statement.
The company said it has launched another search for a CEO and is in discussions with several CEO candidates. The company expects to make an announcement shortly.
"We understand Bob's desire to return to his roots and his passion for University Games," said Toys "R" Us chief executive Robert Nakasone in a statement. "We also remain absolutely committed to making Toysrus.com the leading e-commerce site for toys and children's products."
But Moog's departure was also influenced by several business disagreements, including how the online store would stock its inventory, the Wall Street Journal reported. While Moog intended to seek the best prices, Toys "R" Us wanted the unit to work within the framework for its franchise stores.
Toysrus.com is the giant toy retailers answer to its online challenger eToys, which sprang out of nowhere in late 1997 to become the fifth most-visited Internet retailing site by December 1998 with about 3.9 million individual shoppers, according MediaMetrix.
Shares of Toys "R" Us slipped 3.28 percent to 20.25 in early trading. The stock has traded as high as 24.75 and as low as 13.63 during the past 52 weeks.