Miller Group, part of Shawfair Developments, a joint venture with City of Edinburgh and Midlothian councils were to build a £500m 350-acre mixed-use development.
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If the get-out clause in the contract had not been used around 12,000 jobs would have been created.
Miller Chief Executive Phil Miller said: "Our interest in the joint venture expired at the end of October 2008 and in view of the general market conditions we concluded that we would not renew our interest.
"The project is not viable at the present time and our involvement in the short term would not be required."
A new developer for the project is being sought.
City of Edinburgh councillor Gordon Mackenzie said the project would face delays.
(GK/JM)
