Stade Francais players had begun an open-ended strike last week, denouncing what they called a takeover in disguise, while the French federation and the Paris mayor also opposed the merger.
Racing 92 president Jacky Lorenzetti said in a statement that he had "decided to give this beautiful project up," Lorenzetti said in a statement.
"I have heard and understood the reservations... the social, human, sporting conditions are not met. Perhaps we were right too soon," he added.
"The future of Stade Francais will be written without us and I wish them the best."
