The 24-year-old looked odds-on to join the Reds at some point this weekend after holding talks with the Premier League outfit and undergoing a medical.
Speaking on Saturday afternoon, French Football Federation president Noel Le Graet even appeared to confirm that a transfer was on course to be completed imminently, as Fekir had passed his medical at France's national football centre.
A deal worth up to £60m now appears to be off the cards for good, however, with Lyon deciding to pull the plug at the last minute after Liverpool reportedly attempted to lower the agreed fee.
"Olympique Lyonnais confirms that the tri-party negotiations with Liverpool and Nabil Fekir for the transfer of the Lyon captain have not succeeded and that Olympique Lyonnais have decided to put an end to these negotiations at 8pm (CET) on Saturday night," a club statement read.
"Although Liverpool have been the priority of a possible transfer of Nabil, and subject to other proposals consistent with the interest of Nabil and Olympique Lyonnais and from ambitious clubs, Olympique Lyonnais is delighted to be able to count on the presence of our captain, who is a leading player for the 2018/19 season when the club will play in the Champions League."
Fekir, who would have become the Merseyside outfit's second most expensive signing of all time behind Virgil van Dijk had the move materialised, will now prepare for France's World Cup campaign after making their 23-man squad.