Lonergan wrote and directed the film, which was shot in 2005, and has been in a legal battle with Fox Searchlight after the studio sought a more commercial running time for the feature. Lonergan originally delivered a three-hour film, EW reports.
A shorter version of the film will now get a limited release beginning Sept. 30.
"Margaret," which deals with a young woman who feels she was implicit in the death of a woman in a traffic accident, is Lonergan's second full-length film as writer-director, following "You Can Count on Me" in 2000.
It reunites several cast members from "You Can Count On Me," including Mark Ruffalo and Tony Award winner Matthew Broderick. Also appearing are Paquin, Damon, Allison Janney, Rosemarie DeWitt, Krysten Ritter and Kieran Culkin.
Lonergan's plays include This Is Our Youth, Lobby Hero and The Starry Messenger. He also wrote "Gangs of New York" and "Analyze This."