Farhadi, nominated for Best Foreign Language Film for "The Salesman", said in a statement carried by Iranian news agencies that he had initially planned to attend the ceremony in Los Angeles, but had been forced to change his mind.
Trump signed an executive order on Friday prohibiting entry to the United States to all nationals of seven Muslim-majority states -- Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.
"However, it now seems that the possibility of this presence is being accompanied by ifs and buts which are in no way acceptable to me even if exceptions were to be made for my trip."
He said hardliners in both Iran and the United States acted with the same mentality.
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"Instilling fear in the people is an important tool used to justify extremist and fanatic behaviour by narrow-minded individuals," he said.
His lead actress, Taraneh Alidoosti, had already announced last week that she would boycott the awards over Trump's "racist" visa ban.
Farhadi won the best foreign language Oscar in 2012 for his film "A Separation".
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