Biz, who sings for a band called Loco Locass, has been nominated for a novel called "La chute de Sparte."
The rapper, whose band often champions the French language and Quebec sovereignty, asked to have his book yanked from the list of five finalists in the French-language children's text category.
He said on his Twitter account that while he is "honoured" by the recognition, he is "not a subject of Her Majesty."
His book tells the story of Steve, who is in his last year of secondary school. It deals with friendship, love and the death of the school football team's quarterback.
A spokeswoman for the Canada Council for the Arts took the rapper's decision in stride.
''We respect the choices of jurors when they select books, and we respect an artist's decision to withdraw,'' said Diane Miljours, program officer in the organization's writing and publishing section.
Canada Council's peer assessment committees picked the finalists in various categories.
The general manager of Lemeac, the book's publisher, said she supported the author's decision.
''Biz sent me a message this (Wednesday) morning saying he wanted to thank the jury for choosing his novel but that he had decided not to take part because of his political beliefs,'' Lise Bergevin said in an interview.
The winners will be announced in Montreal on Nov. 13.