Icahn previously owned a little less than a percent of the tech giant's outstanding shares, which were down more than 3 percent midafternoon Thursday after falling more than 6 percent Wednesday. He said he made roughly $2 billion on Apple, a stock he continued to tout as "cheap" despite his reservations.
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Icahn said China's attitude toward Apple largely drove him to exit his position.
"You worry a little bit — and maybe more than a little — about China's attitude," Icahn said, later adding that China's government could "come in and make it very difficult for Apple to sell there ... you can do pretty much what you want there."
He added, though, that if China "was basically steadied," he would buy back into Apple.
The company on Tuesday posted quarterly earnings of $1.90 per share on $50.56 billion in revenue, both of which missed Wall Street's expectations.
Apple's sales declined 13 percent from the prior-year period, its first year-over-year revenue drop since 2003. Sales of its key iPhone slid to 51.2 million from 61.2 million the previous year.
One area of weakness for Apple in the quarter was the Greater China segment — comprising mainland China, Taiwan and Hong Kong. Revenue for that region fell 26 percent year over year to $12.49 billion. Previously, that area had posted consistent growth for Apple.
Still, "we feel good about China," Cook told CNBC earlier this week.
"We remain very optimistic about the China market over the long term, and we are committed to investing there for the long run," Apple CFO Luca Maestri said Tuesday.
Icahn noted he called Cook to tell him he exited the position.
The activist investor purchased his Apple stake in 2013. He previously told CNBC buying into the company was a "no-brainer."
Last May, Icahn said he had a $240 per share price target on Apple when it traded around $130 per share. As recently as September, Icahn told CNBC he considered buying more of the company's stock, saying it looked cheap.
— CNBC's Everett Rosenfeld contributed to this report.