The heiress had been expected to appear in a special episode of Koffee with Karan on her current promotional tour of Asia, The Times of India reports.
"The stage was set for the famous Karan-Paris television face-off. However, Paris's media team reportedly laid down too many conditions," a source claimed.
The My Name Is Khan director is said to have withdrawn from the planned chat, due to the limitations placed upon him as host.
"Karan was allegedly told that he could not ask Paris any personal questions - especially those pertaining to drug use, her jail term or sex tapes," added the source.
In July, Hilton appeared to briefly stop an interview in the US after being asked whether she thought her moment in the spotlight has passed.
Johar is known to ask guests a series of personal questions in the 'Rapid Fire Round' segment of his talkshow.
The 39-year-old said earlier this year that he had run out of celebrities to interview on the programme.