The former Wolves manager had been due to meet Forest's new owners with a view to taking the vacant role at the City Ground.
But after talks the 53-year-old has indicated he does not intend to replace Steve Cotterill, who was sacked by the Championship club on Thursday.
McCarthy has been out of work since losing his job at Wolves in February.
The Al-Hasawi family from Kuwait had suggested the Irishman was a frontrunner for the job but had earlier stressed he would be just one of a number of candidates they intended to meet with.
"Mick is one of the people we are talking to, but there are others. If he meets our requirements, we would be honoured to work with Mick," said Abdulaziz Al-Hasawi. "We have interviewed some people on the phone but we're starting to see people face to face and you get a much better impression when you see them face to face.
"They are more comfortable and can speak more openly."
Support the USA national team with an official 2013 Centennial soccer jersey from Nike. Its Official.
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