Khan said his offer to buy the stadium was perceived to be more divisive than anticipated.
The Football Association announced on Wednesday that Wembley Stadium will not be sold after businessman, Fulham owner and Jacksonville Jaguars owner Shahid Khan withdrew his offer.
"Shahid Khan has informed us today that he will be withdrawing his offer to buy the stadium – and we fully respect his decision," FA chief executive Martin Glenn said.
According to Glenn, Khan informed the FA that he was pulling his bid after it was "being seen as more divisive than it was anticipated to be" without stronger support from football stakeholders. Khan initially believed that his £600m offer, which he hoped would release funds to help improve other facilities in England, would be well received by those within the game. Instead, he was met with pushback.
"Wembley Stadium is an iconic venue that is revered around world and it will continue to thrive under the ownership and direction of The FA," Glenn said. "There has been much deliberation on both sides of this debate and it has undoubtedly raised awareness of the issue that community football facilities in England need significant investment."
The FA said they will continue to explore "new and innovative ways of investing in community football facilities in the future."