"Unfortunately, despite serious efforts to overcome their differences regarding the modalities for meeting in Geneva, the leaders were unable to find common ground," envoy Espen Barth Eide said.
"Without a prospect for common ground, there is no basis for continuing this shuttle diplomacy," he added.
Eide had been engaged in intense shuttle diplomacy between Greek Cypriot leader Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci in a bid to secure their agreement on the proposed conference.
"As both leaders have publicly expressed their desire to reconvene the conference on Cyprus and to finalise all outstanding issues in Geneva, our sole focus has been to agree the modalities by which this can be achieved," Eide said.
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Although he had hoped to get agreement on the conference by the end of the week, he conceded the differences between the two leaders were insurmountable.
"I briefed the ambassadors of the five permanent members of the Security Council in a joint meeting. I will now inform the secretary general (Antonio Guterres) and seek his advice on the way forward," Eide said.
A previous conference involving the guarantor powers in Geneva in January failed to agree on a post-peace security strategy.
UN-backed peace talks seek to reunite Cyprus under a federal roof.
Anastasiades and Akinci remain at loggerheads over core issues such as power sharing, territorial adjustments, security arrangements and property rights.
The Greek Cypriot leader wanted Geneva to focus on post- solution security arrangements while Akinci wanted issues of power sharing at the fore.
The government's drive to explore for offshore oil and gas has also clouded the negotiations, with Ankara calling for it to be halted until a settlement has been reached.
The two sides have been engaged in fragile peace talks since May 2015 that observers see as the best chance in years to reunify the island.
This process now looks in jeopardy, although a UN spokesperson put a brave face on the setback.
"The talks have not collapsed. The process remains leader-led and we now have to hear from the leaders how they see a way forward," the spokesperson told AFP.
But in recent months there has been a negative climate of blame and mistrust.
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