According to Sky Sports News, Vydra had concerns about moving to the Championship club and for that reason the deal did not go through. The Czech did not want to join a club that finished lower than Derby last season in the Championship.
The news comes after new manager Frank Lampard excluded Vydra from the Rams' pre-season training camp in Tenerife. This was because of the ongoing transfer saga surrounding the player as he was allowed time to complete a potential move away from the club. He also stayed at home to work on his fitness.
The versatile 26-year-old, who can play on the wing as well as an attacking midfielder, was the second tier's top scorer last season with 21 goals in 40 appearances. Yet Derby's owner Mel Morris is looking to reduce their wage bill down to around £22m, especially given the number of signings the club have made already.
Derby may feel that this is another road block as they look to offload the player as quickly as they can so they can further strengthen their squad.
Meanwhile, the club have already seen three departures, including Andreas Weimann to Bristol City. Darren Bent and Jason Shackell have both been released.
Lampard's side finished last season in sixth place, earning them a spot in the promotion play-offs. They then played Fulham in the semi-final of the playoffs, losing 2-1 on aggregate. Derby's first Championship match is against Reading on 3 August.