Roy turned down an offer to coach the team, which he led to two Stanley Cup titles but is reeling from its worst finish since moving to Denver in 1995 and has very little financial maneuverability.
"All I can say is that the Avalanche's offer was more than interesting," Roy said at a news conference Wednesday in Quebec.
The Denver Post first reported Roy's decision on the newspaper's Web site Wednesday. Both sides had refused for weeks to confirm that Roy had been offered Tony Granato's coaching job.
Roy phoned Avalanche president Pierre Lacroix late Tuesday night to tell him he won't accept the team's offer, citing family reasons. He said he wanted to stay with the Quebec Remparts of the Quebec Major Junior Hockey League.
Roy is coach, co-owner and general manager of the Remparts.
"My quality of life here in Quebec City is extraordinary," he said. "I adore this adventure, I adore working with youth. For me it's a daily challenge, working to help these youths realize their dreams."
Roy declined to reveal details of his discussions with the Avs but said he mulled their offer for two weeks.
Roy met with Lacroix in Denver on May 7, about three weeks after general manager Francois Giguere was fired following Colorado's last-place finish in the West. Colorado's 32-45-5 mark was the franchise's worst since moving from Quebec in 1995.
The Denver Post reported that Roy wasn't shutting the door on ever returning to the Avs, whom he led to Stanley Cup titles in 1999 and 2001, but that he needed to spend time with his family.
Team spokesman Jean Martineau told The Associated Press that Roy had been offered the job after meeting with Lacroix in Denver and that Roy had asked for a few of weeks to contemplate the offer. Martineau declined to say whether Roy had also been offered the Avs' vacant general manager job, but said the search continues for "individuals who might be a part of the new management structure."
Martineau said Granato, who has two years left on his contract, is still Colorado's coach.
Granato, who had remained silent as Roy pondered the offer, spoke briefly Wednesday to Sportsnet.ca, a Canadian media outlet. "I still love being part of it, and I understand that some of the things that happen within any position aren't always fun, but you deal with them and hope better days are ahead," Granato told Sportsnet.ca. "I wouldn't look at it any other way than to be excited to get back and try to get our team back on track."
Earlier this month, Roy had denied receiving an offer from his old NHL team, and there was a report in Montreal that he also had been offered the Avalanche's vacant general manager's job, perhaps as a way to sweeten the offer should the Canadiens also try to hire him.
Roy began his standout career in Montreal before leading Colorado to two championships. He retired in 2003 and was elected to the Hall of Fame in 2006.
Last year, Roy said he wanted to stay in Quebec to coach his sons, Jonathan and Frederick, and while they are no longer playing for their father, they are starting new ventures in their lives and Roy felt it was important to be closer to them.
Jonathan Roy is pursuing an acting career and Frederick Roy wants to get into the music business, The Denver Post reported.
The Avalanche, whose 199 goals were the fewest in the NHL last season, have salary cap issues facing their next general manager.
The team has only about $10 million to $12 million in which to fill out the roster because 14 players have contracts that account for nearly $44 million next year. That doesn't include captain Joe Sakic, who spent most of the year on the injured list, and either goaltender, Peter Budaj and Andrew Raycroft, who are unsigned for next season.
Information from The Associated Press was used in this report.