The WBC Silver welterweight champion had previously been confident of fighting the 36-year-old Filipino, who was beaten by the now-retired Floyd Mayweather Jr back in May.
Khan was denied a bout with Mayweather when the American elected to finish a career by fighting Andre Berto in September. Mayweather won the contest to seemingly end his career an unbeaten 49-0.
And he now looks set to miss out on a fight against Pacquiao, who is reported to have focused his attention on a possible rematch with Mayweather.
Khan told The National: "I'm really disappointed in Manny and his team. They aren't playing ball. All that was left to do is to sign the contract. But they are stalling.
"I have pulled out of the negotiations. I am no longer fighting Manny Pacquiao. They know I am a tricky fight for him and they know I will beat him. Or else, why pull out of a fight when there is a lot of money on the table?
"I don't really know if Mayweather is fighting Pacquiao again. It is a possible reason for him to stall on signing the contract, but I don't really know.
"I am not going to wait around for Manny like I did for Mayweather. I need to fight and if they don't want to fight then that's fine, I have other targets."
Khan mooted Danny Garcia and Lamont Peterson, who have both defeated him in the past, as possible alternative opponents.
He added: "I already had a back-up plan drawn up in case the Pacquiao fight didn't go to plan. We are looking at a Danny Garcia rematch. I also would like to fight [WBO welterweight champion] Tim Bradley; that's another interesting fight.
"A rematch with Lamont Peterson and, of course, [IBF welterweight champion] Kell Brook is also another option.
"I am willing to fight anyone, but it seems not everyone is willing to fight me."