The company was concerned that costs would balloon out of control on the big-budget adaptation of John Milton's epic poem.
"This isn't 'Avatar,'" the individual told TheWrap. "They're only going to make it for a price."
Also read: Universal Pulls the Plug on 'The Dark Tower'
Production on the movie was delayed last winter with Legendary reportedly looking to trim the $100 million-plus budget by 10 to 20 percent. The intricate special effects needed to bring a celestial battle between heaven and hell to life required a substantial investment in technology that made the cuts impossible, the individual told TheWrap.
Legendary is not the only film company to get cold feet about big budget productions in recent months. Last summer, Universal nixed an ambitious multi-part adaptation of Stephen King's "The Dark Tower" over budget concerns despite the involvement of director Ron Howard and Javier Bardem.