Deadline reported that the Academy had yanked the actor's tickets for the Oscars, because the stunt would make a mockery of the red carpet.
The Academy also has a policy of excluding any studio-specific film promotion during the Oscars telecast.
A spokesperson for the Academy told Deadline.com: "We would hope that every studio knows that this is a bad idea. The Red Carpet is not about stunting."
Paramount, the studio behind both Hugo and Dictator, declined to comment on the matter, reports the Los Angeles Times.
"Unless they're [the Academy] assured that nothing entertaining is going to happen on the Red Carpet, the Academy is not admitting Sacha Baron Cohen to the show," a studio insider told Deadline.
But an Academy spokesperson later told The Hollywood Reporter that Cohen's tickets haven't been pulled - yet.
"We haven't banned him," said the rep. "We're just waiting to hear what he's going to do.
"We don't think it's appropriate, but his tickets haven't been pulled. We're waiting to hear back.
"We've been in contact with his team and they know we're waiting to hear, but we'd love to have him at the show."
Adds the spokesperson to E! News: "We've made our position clear to Mr. Cohen's team. We'd love to have him at the show, but the ball is in his court.
"The position we took was, 'We would not like you to do this,'" the rep said.
Explained the rep: "Our tradition has been to not use our carpet as a location for promotional stunts.
"To give some background, we also don't introduce presenters as 'star of the upcoming movie...Will Ferrell.' We keep that piece out of the show.
"Other shows do that, but at our show, it's just, 'Ladies and gentlemen, Will Ferrell.' We don't have promotional clutter going through our telecast. It's all about the celebration of movies we've seen."
Cohen has attended awards bashes in character before.
In 2009, he attended the MTV Movie Awards in character as flamboyant fashion reporter Bruno. In a rehearsed stunt, Cohen flew down from the ceiling while suspended by a wire, and landed on Eminem's lap while baring his naked backside.
There's been no word from Cohen's rep on the Oscars front.
Stay tuned for updates ...
Watch a trailer for The Dictator below:
The movie is set to open in May.
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