Holliday, best known for her Tony-winning role in Broadway's "Dreamgirls," faced pressure from her gay, lesbian and black fans when it was announced she would sing at a Thursday concert at Washington's Lincoln Memorial.
Holliday said in an interview Saturday that she decided not to participate at 3 a.m. after reading commentary about how the decision was being seen. She apologized for a lack of judgment.
"It just really hit home for me," she said. "The gay community has big part of my life and my career. I feel there really wouldn't be a Jennifer Holliday or a 'Dreamgirls' in the 21st Century without them. I needed to at least hear them out and learn why it would be such a great disappointment for them."
Reading what was being said about her was painful, she said.
She said other black people slammed her with insults such as "Uncle Tom" and other racial epithets. "I had no idea it would be interpreted as a political statement."
Several prominent entertainers have declined to perform at Trump inaugural festivities. Country star Toby Keith and actor Jon Voigt are in the lineup for Thursday's concert.
Holliday's reversal was first reported by The Wrap ; the publication obtained a letter Holliday wrote to her fans. In an interview Friday with the AP, she said she had seen her performance as singing for people at the Lincoln Memorial, not singing for Trump.
The celebrity wattage for Trump's inaugural festivities doesn't rival that of President Barack Obama's inaugurations, which attracted top names including Beyonce, Bruce Springsteen, U2, Alicia Keys, Kelly Clarkson, Eva Longoria and Jennifer Hudson, among others. But Trump has insisted that's how he wants it, saying the swearing-in festivities should be about the people, not the A-list stars.