Budapest: Sauber and Honda on Thursday confirmed they had cancelled their agreement for the Japanese company to supply engines to the Swiss team next year.
Both parties agreed to the cancellation and said it followed a change of management direction at Sauber following the departure of former team chief Monisha Kalterborn last month.
"We had built a good relationship with Sauber, and had been looking forward to entering the 2018 F1 season together," said Honda's Masashi Yamamoto.
"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."
Sauber's mew team boss Fred Vasseur said: "It is very unfortunate that we have to discontinue the planned collaboration with Honda at this stage.
"This decision has been made for strategic reasons and with the best intent for the future of the Sauber F1 team in mind."
Honda has struggled to provide competitive engines for McLaren this year and since returning to F1 in 2015.
Sauber may now consider extending their long-term relationship with Ferrari.