News began to circulate about Napolitano's rumored dismissal after his noticeable absence during Fox's coverage of confirmation hearings for Supreme Court nominee Neil Gorsuch, something he would usually be actively involved in. The New Jersey judge was also unavailable for comments.
Napolitano has been keeping a low profile on social media since he made the claims Thursday, leading to an escalation of tensions between British foreign surveillance agency, the Government Communications Headquarters (GCHQ), and the White House.
A person with knowledge of the situation who spoke on condition of anonymity because it was a personnel matter said Napolitano has been benched and won't be appearing on the air in the near future.
Napolitano's report last week on "Fox & Friends", saying he had three intelligence sources who said Obama went "outside the chain of command" to watch Trump, provoked an global incident.
Andrew Napolitano has been pulled from the Fox News Channel, a source at the organisation said.
The allegations - repeated by Mr Trump, who claimed he was quoting a "very talented legal mind" from Fox - were dismissed by GCHQ as "utterly ridiculous". Immediately after that report, Fox News anchor Shepard Smith said, "Fox News knows of no evidence of any kind that the now-president of the United States was surveilled at any time, in any way".
But Napolitano said on one program that "Fox News has spoken to intelligence community members who believe that surveillance did occur, that it was done by British intelligence".
In a statement read on Fox News on Sunday, Napolitano defended his comments.
Federal Bureau of Investigation director James Comey also denied the suggestion made by Mr Trump in a tweet earlier this month that he had been bugged by Mr Obama.
"We love the judge, we love him here at Fox, but the Fox News division was never able to back up those claims and was never reported on this show", Baier said.