The Royal Papworth Hospital NHS Foundation Trust confirmed the sale of its old Papworth Everard site to a Chinese-backed firm will not now be going ahead.
According to the trust, the decision follows a failure by the purchaser to meet the "legal and financial requirements of the agreed contract".
Global Healthcare Real Estate Ltd, chaired by investor and entrepreneur Grace Bian, had unveiled an ambition to build a five-star health and wellness village comprising a country club and spa, convalescence and rehabilitation units, villas, and apartments.
In August, when asked by the Hunts Post, the trust said it was 'unable' to say how much the firm had paid to acquire the site.
The 13-acre site will now be remarketed but, in the meantime, the site will continue to be used by Cambridgeshire Constabulary and Cambridgeshire Fire and Rescue Service for training purposes.
In the meantime, the trust has confirmed it has secured the sale of Queen Mary's nurses' home and it expects to complete the sale of St Peter's nurses' home by Christmas.
It is envisioned that these buildings, which were off the main hospital site and used to house nursing staff, will be converted into flats by the respective developers.
Stephen Posey, chief executive at Royal Papworth Hospital NHS Foundation Trust, said: "We are very disappointed the sale of our old Papworth Everard site has fallen through.
"The hospital has worked diligently over the past months to conclude the deal and have waited patiently for several weeks beyond an already extended deadline. "However, it has become clear the buyer was unable to meet the requirements of the contract and any extension of the deadline would not resolve the problem.
"We understand the frustration people will feel when they hear this news. We were as keen as the local parish council, businesses and residents to secure the future of our old site. The land will now be remarketed and we look forward to seeing the proposals which are put forward.
"There has been good news in the sale of the Queen Mary's and St Peter's nurses' homes which are planned to be converted into small flats. These will become a valuable addition to the housing stock in the village. As we have promised throughout this process, we will continue to ensure residents and the council in Papworth Everard are kept fully up to date with any future news."