The daytime drama about the residents of Ramsay Street has been shown on UK television for more than 30 years and has launched the careers of stars including Kylie Minogue, Jason Donovan and Margot Robbie.
Channel 5 said dropping the soap will allow funding to be diverted to original UK dramas.
A spokesperson for the channel said: ‘Neighbours will no longer air on Channel 5 beyond this summer.
‘It’s been a much-loved part of our schedule for more than a decade, and we’d like to thank the cast, Fremantle and all of the production team for their fantastic work on this iconic series.
‘We’d also of course like to thank the fans for their loyal support of Neighbours across the years.
‘We recognise that there will be disappointment about this decision, however our current focus is on increasing our investment in original UK drama, which has strong appeal for our viewers.’
The soap, which launched in 1985, has long been more popular in the UK than in Australia, so the news has thrown the future of the show into doubt.
The longest running drama series on Australian television, Neighbours initially launched on Australia’s Seven network in 1985, but the channel axed it before Ten picked it up the following year and it became an international hit.
In Australia it has been shown on digital channel 10 Peach since 2011 after losing its place following the nightly news on the main channel, and has been reliant on the UK broadcaster for funding.
An email to staff from Fremantle Media executive producer Jason Herbison, seen by the Sydney Morning Herald, said production will stop for an indefinite period because of the lack of a broadcast partner to back it financially.
Staff have been asked to attend a meeting on Monday and filming will continue until June 10.
The email said: ‘Our audience remains steady and Channel Ten would love the show to continue if we could find another broadcast partner to replace [Channel 5].
‘These discussions are ongoing, however there is no new broadcaster at the moment and production must end, effectively resting the show.
‘We are so proud of the show, you all and everything that you’ve achieved. But for now, this chapter is closing and we want to work together to give Neighbours the amazing send-off it deserves.’
Neighbours was shown on BBC One until 2008, when it moved to Channel 5.
It has featured a number of British guest stars in recent years, including Amanda Holden, Sophie Ellis-Bextor, Ryan Thomas and Janet Street-Porter.