The US actor decided not to star as Sam Witwicky in any more Transformers films because he doesn't "have anything new to contribute", with Mark Wahlberg set to star in the upcoming fourth instalment.
Michael, who will be directing the next movie, told TMZ.com: "I kind of helped raise Shia for three movies. And it's really tough. Fame is very hard on young people. And you know Shia LaBeouf is a great, great guy. He's a great actor. And I have nothing but respect for him."
The filmmaker, who has been working with Wahlberg on dark comedy Pain And Gain, revealed that the Oscar-nominated actor will not play an older version of Sam, and that Transformers 4 will begin four years on from the third film, Dark Of The Moon.
"The movie will continue four years from the attack on Chicago; which is in the last movie. So it's going to still have the same lineage. And it's going a full new direction and feels very natural how it's going in that direction," he said.
He added: "There is no way you're going to ever find out the story... you don't have to dig through my trash ... I shredded my trash."
Transformers 4 is scheduled for release in July 2014.