The Princess will keep her title, but is surrendering official duties to “create a clearer dividing line” between her private and royal role.
Her fiancé, Durek Verrett, has promoted unfounded medical practices, including suggesting cancer is a choice.
The American also claims to have influenced Gwyneth Paltrow.
Princess Märtha Louise is “relinquishing her patronage role” as she and Mr Verrett seek to “distinguish more clearly between their activities and the Royal House of Norway”, the palace said in a statement. It added that King Harald V had decided she would keep her title.
“She has performed her duties with warmth, care and deep commitment,” the statement said.
Despite the announcement, King Harald described Mr Verrett as a “a great guy and very funny to be with”.
“He has a lot of humour, and we laugh a lot, even in this difficult time. I think both we and he have gained a greater understanding of what this is about, and we’ve agreed to disagree,” King Harald told Norwegian reporters.
In a separate statement, Princess Märtha Louise said she was “aware of the importance of research-based knowledge”, but that she believed alternative medicine can be “an important supplement to help from the conventional medical establishment”.
She added that it was important to “distinguish between myself as a private person on the one hand and as a member of the Royal Family on the other”.
The Princess, 51, has attracted controversy in Norway for decades for her involvement in alternative treatments, including starting a school that aimed to help people “get in touch with their angels”. She has been accused of using her royal title for competitive gain.
In 2002, she married Norwegian writer and artist Ari Behn and the couple had three daughters. They divorced in 2017 and Mr Behn – who had discussed suffering from depression – died by suicide on Christmas Day 2019.
In June, Princess Märtha Louise became engaged to Mr Verrett. She announced the relationship in a 2019 Instagram post, pre-empting potential criticism.
In the post, she said: “To those of you who feel the need to criticise: Hold your horses. It is not up to you to choose for me or to judge me. Shaman Durek is merely a man I love spending my time with and who fulfils me.”
Despite that post, the couple have attracted considerable criticism among many in Norway, with Mr Verrett variously being described as “a charlatan”, a conman and a conspiracy theorist.
Former Prime Minister Erna Solberg described his views as “very strange” and “not based on facts”, adding that his ideas promoted conspiracy theories.
Mr Durek – an African-American who describes himself as a “6th Generation Shaman” – has claimed to have risen from the dead and to have predicted the 9/11 attacks in the United States two years before they took place.
He has said the criticism he faces is due to racism, saying he has “never experienced as much racism” as when he came to Norway. He has also compared himself to the likes of Albert Einstein and Thomas Edison, claiming they were “geniuses” and “misunderstood”.
On his website, he describes himself as a “visionary for the ‘Now Age'” who “demystifies spirituality”. He said his work had influenced actresses Gwyneth Paltrow and Nina Dobrev.
A survey published in September found that just 13% of Norwegians thought Princess Märtha Louise should represent the Royal Family in official duties.
A royal biographer told local media: “I think this is more about the occult phenomenon she’s been associated with, than the princess as a person.”