The American sportswear giant has walked away from negotiations with the club as it felt United were demanding too much money.
A Nike statement released to Press Association Sport on Tuesday confirmed the company had decided against renewing the 13-year kit deal, which was signed in 2002.
The Nike statement read: "Manchester United is a great club with passionate fans.
"We are proud to have partnered with them for the last 12 years and will continue to sponsor the club until the end of the 2014/15 season.
"Any partnership with a club or federation has to be mutually beneficial and the terms that were on offer for a renewed contract did not represent good value for Nike's shareholders.
"We look forward to a successful final season with the club."
Reports have suggested adidas is in pole position to clinch a deal which could see the club earn £60million a year from 2015.
Nike's original deal was worth £303million, with extra income from a profit share agreement from merchandise sold worldwide.
On Monday, United unveiled their new home kit for the 2014-15 season - which will be the last designed by Nike and the first to bear the logo of new sponsor Chevrolet.
United announced they would be entering a seven-year agreement - worth a reported £53million per season - with the US car giant from this summer back in 2012.
Source : PA
Source: PA