Honda and Sauber have agreed to pull the plug on their deal for the Japanese manufacturer to supply the Swiss team with Formula One engines in 2018.
A deal had been confirmed during the Russian Grand Prix weekend for Sauber to take on Honda engines, with ex-team principal Monisha Kaltenborn the key architect behind the agreement.
Following Kaltenborn's departure from Sauber ahead of the Azerbaijan Grand Prix in June, speculation intensified that the deal could be called off, with Honda engine boss Yusuke Hasegawa wanting an answer from the team "as soon as possible".
Sauber has run one-year-old Ferrari power units in its cars this season but has struggled. The team is ahead of only Honda-powered McLaren in the constructors' championship by a margin of three points.
"We had built a good relationship with Sauber, and had been looking forward to entering the 2018 F1 season together," Honda motorsport general manager Masashi Yamamoto said.
"However, during discussions after management changes at the team, we reached a mutual agreement to call-off the project due to differences in the future directions of both parties. We would like to thank Sauber for their cooperation, and wish them all the best for their future."
Incoming team principal Frederic Vasseur -- who begins his role at Sauber at this weekend's Hungarian Grand Prix -- said: "It is very unfortunate that we have to discontinue the planned collaboration with Honda at this stage.
"However, this decision has been made for strategic reasons, and with the best intent for the future of the Sauber F1 Team in mind. We would like to thank Honda for their collaboration, and wish them all the best for their future in Formula One."
Honda's only F1 link is now with McLaren, though it remains unclear whether the Woking-based outfit will stick with Honda power in 2018. It is also uncertain whether Sauber will extend its long-term Ferrari deal or pursue an alternative for next year.
Honda added in a statement that its "passion for motorsports and strong commitment to Formula One remains unchanged."