"Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," the New York-based company said in a statement.
The announcement put an end to a long-running saga that drew widespread attention over fears that British jobs and research capability would be lost and accusations that the tie-up was a cynical ploy by Pfizer to pay less tax.
Pfizer had said that the combined company would deliver an expanded product pipeline, deep potential cost cuts and significant tax savings.
"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Read, chairman and CEO of Pfizer in the statement.
Pfizer's proposal also included a controversial plan to re-domicile the combined company in Britain for tax purposes, in a move that would help it avoid paying billions of dollars in tax to the US government.
Pfizer's play for AstraZeneca comes as global pharmaceutical giants manoeuvre to cope with lost revenues from public sector cutbacks in health care, and patent expirations.