The unique race was scheduled to be shown in prime time on NBC.
Tarmoh, who felt all along she had won the race June 23, did not give any reasons she was surrendering a chance to possibly run the 100 in London. USATF president Stephanie Hightower said the organization was "disappointed" about Tarmoh's change of heart.
The controversy in the 100 overshadowed the trials because USATF had no protocol in place to deal with a dead heat. And while officials scrambled to draft a tiebreaking procedure, the athletes didn't want to talk about it until after the conclusion of the 200 - nearly a week later.
The tiebreak also didn't exactly address this particular situation - an athlete committing to race and then deciding not to at the last minute. The matter, however, was resolved once Tarmoh stepped aside.
Felix said Sunday that she would allow her health to make the final decision on whether she would run. If she warmed up and didn't feel right, she was going to pull out of the competition.
Felix will now race in both the 100 and 200 in London. She is the favorite to win her signature event, the 200, after winning silver medals in the last two Olympics.
Although Tarmoh didn't qualify in the 200, she's eligible to run in the Olympic 400-meter relay.
"The situation has been difficult for everyone involved," Felix said in a statement. "I had accepted the USATF decision and was prepared to run at 5 p.m. I wanted to earn my spot on this team and not have it conceded to me, so I share in everyone's disappointment that this runoff will not happen."
Tarmoh only reluctantly agreed to the runoff. She believed she won nine days ago.
"In my heart of hearts, I just feel like I earned the third spot," she said Sunday. "I almost feel like I was kind of robbed."
The situation has been a debacle since Felix and Tarmoh crossed the line in 11.068 seconds.
Tarmoh leaned across the finish line and looked up to see her name on the scoreboard in the third spot behind winner Carmelita Jeter and runner-up Tianna Madison. The 22-year-old Tarmoh even took a celebratory lap, waving an American flag. She received a medal and held a news conference.
Then she found out about the dead heat from reporters.
The options USATF presented to settle the tie were a runoff, coin flip, or one athlete conceding the spot to the other.
The athletes and their agents met with USATF representatives Sunday, and Felix and Tarmoh chose to settle matters on the track. Tarmoh, however, was clearly unhappy with the choice.