The Fairfield, Connecticut, conglomerate said that it will continue to run the business as it looks for other options to sell it.
General Electric Co. Offered no reason for its decision in a brief statement released today.
Electrolux is the world's second-biggest home appliance maker after US rival Whirlpool. The Stockholm-based company sells most of its products in the US under the Frigidaire brand.
The US Department of Justice had sued to stop the deal in July, saying the combined company would dominate sales of ovens and other cooking-related kitchen appliances, especially to customers like home builders, property managers, hotels, and governments.
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The attorney also said huge retailers like Home Depot and major home builders can pressure manufacturers to keep prices low and competition intense.
Electrolux said Monday that it "regrets that GE has terminated the agreement while the court procedure is still pending."
The Swedish company said settlement proposals that it considered to be reasonable were offered to federal regulators and would have addressed concerns about competition, but the Department of Justice rejected those proposals.
It said Monday that it was entitled to a breakup fee of USD 175 million from Electrolux.
GE shares fell 9 cents to USD 30.40 in premarket trading Monday about an hour ahead of the US market open, while Electrolux shares dropped 11 per cent in afternoon trading in Stockholm.