The Canaries had a bid accepted for the 27-year-old forward, but could not agree personal terms with the Swedish international.
Instead, Norwich went on to sign his compatriot Johan Elmander, who netted a brace in their 6-3 Capital One Cup victory over Bury, but Toivonen has stressed his happiness with his decision to stay at PSV.
"The clubs were happy with the agreement, but I did not get what I wanted." Toivonen told Expressen.
"I am happy in Holland and the family enjoy themselves and if I don't get what I want, I don't move. There are three parties who need to be pleased."
Toivonen has scored six goals in 34 appearances for Sweden since debuting in 2007.