Effenberg had been linked with the record German champions after another potential employer, Schalke, extended the contract of their head coach Jens Keller at the weekend.
However, Bayern's director of sport Matthias Sammer says Effenberg has turned down the offer.
"I am and was always in contact with Stefan," he told Sport1 television. "In the talks we held, it became clear that this is not what he wants to do.
"I certainly cannot imagine him coaching our reserve team in the fourth division."
Effenberg, who has completed studying for a coaching badge, has made it clear he would be keen on starting his coaching career in the Bundesliga next season.