The Cambridge academic - who himself has Motor Neurone Disease - said he was keen to support the Motor Neurone Disease Association (MNDA) by taking part.
But due to his health, he avoided a drenching by convincing his children to take his place.
In a video posted on YouTube, Prof Hawking said: "Because I had pneumonia last year, it would not be wise for me to have a bucket of cold water poured over me.
"But my children, Robert, Lucy and Tim, gallantly volunteered to take the challenge for me.
"I urge you to donate to the MNDA, to eliminate this terrible disease."
He went on to nominate his own victims including Lord Sainsbury, the University of Cambridge chancellor, and its vice-chancellor professor Sir Leszek Borysiewicz.
The internet craze has seen thousands of people post videos of themselves having icy water poured over them in aid of the charity.
The MNDA said it had now raised £2 million through ice bucket challenge donations.
A spokesman added: "The response has been truly phenomenal and is still continuing, raising an unprecedented amount of money that will have a huge impact on the work we can do on this poorly understood but devastating disease and also raising awareness across the UK and the world."
Prof Hawking, most famous for his book A Brief History Of Time, is almost completely paralysed due to a Motor Neurone Disease related to amyotrophic lateral sclerosis.
He was diagnosed at the age of 21 while studying at Cambridge and at the time was given a life expectancy of two years.
Despite the progression of his illness, which has resulted in him speaking through a computer in his now trademark voice, the 72-year-old is recognised as one of the greatest minds in physics and astronomy in the world.