Hollywood star Scarlett Johansson has dropped out of a role in which she was going to play a transgender man following a backlash from the LGBT community.

The actor exited the drama film "Rub and Tug" a little more than a week after her casting sparked backlash amid trans groups and activists.

"In light of recent ethical questions raised surrounding my casting as Dante Tex Gill, I have decided to respectfully withdraw my participation in the project. Our cultural understanding of transgender people continues to advance, and I've learned a lot from the community since making my first statement about my casting and realise it was insensitive.

"I have great admiration and love for the trans community and am grateful that the conversation regarding inclusivity in Hollywood continues. According to GLAAD, LGBTQ+ characters dropped 40 per cent in 2017 from the previous year, with no representation of trans characters in any major studio release," Johansson told Out Magazine in a statement.

"Rub and Tug" focused on Dante Tex Gill, a crime kingpin who used his massage parlour as a front for prostitution in the '70s and '80s. Gill lived his life as a trans man, which led many on social media to wonder why a trans actor was not tapped for the role.

"Oh, word?? So you can continue to play us but we can't play y'all?” Trace Lysette, a transgender actress best known for appearing on Amazon's "Transparent," wrote on Twitter after the casting announcement.

"Actors who are trans never even get to audition FOR ANYTHING OTHER THAN ROLES OF TRANS CHARACTERS," tweeted Jamie Clayton, another transgender actress known for her role on "Sense8."

"While I would have loved the opportunity to bring Dante's story and transition to life, I understand why many feel he should be portrayed by a transgender person, and I am thankful that this casting debate, albeit controversial, has sparked a larger conversation about diversity and representation in film.

"I believe that all artists should be considered equally and fairly. My production company, These Pictures, actively pursues projects that both entertain and push boundaries. We look forward to working with every community to bring these most poignant and important stories to audiences worldwide," Johansson added.

Gay & Lesbian Alliance Against Defamation (GLAAD) responded to the news with a statement, celebrating the decision as well as those who spoke out against the casting.

"Scarlett Johansson's announcement, together with the transgender voices who spoke out about this film, are game changers for the future of transgender images in Hollywood.

"Hollywood changed how Americans understand gay and lesbian lives, and TV is starting to do the same for transgender people with authentic transgender portrayals being major hits with critics and audiences. The film industry has a real opportunity to do the same," said GLAAD president and CEO Sarah Kate Ellis.

New Regency won an auction for "Rub and Tug" on July 2, and it was set to be directed by Rupert Sanders, who previously worked with Johansson on "Ghost in the Shell".