After 30 hours of negotiations over three days, the two sides remained divided over two main issues - the division of revenues and the structure of the salary cap system.
"Ultimately we were unable to bridge the gap that separates the two parties," NBA Deputy Commissioner Adam Silver said. "We understand the ramifications of where we are. We're saddened on behalf of the game."
Union president Derek Fisher also acknowledged the seriousness of the situation.
"This is not in any way about ego," he said. "There are a lot of people's livelihoods at stake separate from us."
Without a deal, NBA Commissioner David Stern must decide soon on the next round of cancellations. The season was supposed to begin Nov. 1, but all games through Nov. 14 - 100 in total - have been scrapped, costing players about $170 million in salaries.
"Hopefully, we can get back to the table but certainly a tough day, a very tough day," labor relations committee chair Peter Holt said.
Previously each side had proposed receiving 53 percent of basketball-related income after players were guaranteed 57 percent under the previous collective bargaining agreement.
Silver said the league formally proposed a 50-50 revenue split Wednesday, and the union moved from 53 percent to 52.5 percent Thursday.
Asked whether the players would drop to 50 percent, Holt said he didn't think it was that big of a jump but that obviously the union did.
Holt said the league would not go above 50 percent "as of today, but never say never on anything."
Union executive director Billy Hunter said players essentially were given an ultimatum - take the 50-50, or there was no reason to further discuss the system.
Stern has the flu and did not attend Thursday's negotiating session.
Owners and players met with federal mediator George Cohen for 16 hours Tuesday, ending around 2 a.m. Wednesday, then returned just eight hours later and spent another 8½ hours in discussions. The two sides then met for about 5 hours Thursday.
In a statement, Cohen said the two sides were not able to resolve the "strongly held, competing positions that separated them on core issues."
"In these circumstances, after carefully reviewing all of the events that have transpired, it is the considered judgment of myself and Deputy Director Scot Beckenbaugh, who has been engaged with me throughout this process, that no useful purpose would be served by requesting the parties to continue the mediation process at this time," Cohen said.