Altman apologized to Razorbacks fans "with deep regret" and said returning to Creighton was in his family's best interest.
Arkansas Chancellor John A. White announced Altman's departure at a hastily scheduled news conference outside Bud Walton Arena.
"I knew it was a very difficult decision for them and their family," White said.
Altman has coached the Bluejays for 13 years and said he made the decision to return to the Omaha, Neb., school after talking to his wife and Creighton's athletic director, who agreed to take him back.
"This is something I'm doing for my family," Altman said. "I wish I would have come to that decision earlier."
Altman had been hired to replace the fired Stan Heath. South Florida hired Heath on Monday.
White did not provide a timetable for a renewed search.
"We'll be engaging the services of a search firm to help us" hire a new coach, White said. "We'll be able to attract a very strong coach to come to the Razorbacks. This program is strong and we're going to be strong in the future."
Altman had been courted by other big programs before.
"It's just something that, when I got here, my heart and my 13 years at Creighton wouldn't allow me to do it," he said. "My ego was involved and I'm not sure of all of the reasons, but again, it was something today that, in my heart, wouldn't allow me to do it."
White said he wished Altman well but was hopeful that the Razorbacks and the coach would one day cross paths.
"The No. 1 priority is doing what's best for you and your family," White said. "I'm looking forward to meeting you in the Final Four and beating the socks off you."