President Porfirio Lobo of Honduras will not attend an EU-Latin America summit later this month, to avoid a boycott by South American leaders.
Several presidents had threatened to shun the meeting in Madrid if Mr Lobo attended.
They consider his government illegitimate because of the way his predecessor, Manuel Zelaya, was ousted.
Mr Lobo will still travel to Spain for a parallel meeting between the EU and Central America.
The Honduran president accused the leaders who had threatened to boycott the summit of arrogance. He said he was the democratically elected president of Honduras.
But Mr Lobo said he did not want to be a source of conflict, and would therefore only attend the smaller Central American meeting, the day before the main EU-Latin America summit.
South American leaders are now expected to take part.
Leaders including Luis Inacio Lula da Silva of Brazil and Hugo Chavez of Venezuela had urged Spain to revoke Mr Lobo's invitation because of the way Mr Zelaya was removed from office.
He was ousted over amid a dispute over his plans to hold a vote on whether a constituent assembly should be set up to rewrite the constitution.
Mr Lobo won last November's election, but his legitimacy remains a contentious issue, especially in South American.
The European Union initially condemned the Mr Zelaya's overthrow, but later accepted Mr Lobo as president of Honduras, following the stance of the United States and most Central American countries.
The summit in Madrid on 18 May will bring together more than 30 Latin American and Caribbean nations and 27 EU member states.