The PNG Chiefs reportedly targeted Hudson Young with a tax-free offer of $900,000 per season as they look to strengthen their forward pack.
In response, the Canberra Raiders had tabled a four-year proposal worth $1.1 million annually, totalling $4.4 million and keeping Young in Canberra through 2031.
But on Monday afternoon, the Raiders confirmed they had withdrawn the offer and would not give him a deal.
"After discussions with members of the board and senior management, the Canberra Raiders have withdrawn their latest contract offer to Hudson Young," the statement read.
The 28-year-old has played more than 150 games for Canberra, and the club had hoped to keep him for the rest of his career.
"The offer that was made was the largest in club history. As a club, we believe we have done all we can to keep Hudson in Canberra," the statement said.
Young has appeared in nine State of Origin matches for NSW and six Tests for Australia.