The collapse, first reported by Reuters, came hours after the expiry of a midnight deadline with no agreement on how to implement a first-aired deal in 2018, partly in response to a similar European Airbus acquisition by Canada.
Boeing accused Embraer of failing to meet conditions for closing the transaction, but Embraer said Boeing had torpedoed it as a result of the coronavirus crisis and the grounding of its 737 MAX, due to wider financial problems it faces.
"Embraer strongly believes that Boeing wrongly terminated the (agreement,)" said the Brazilian firm.
Boeing struck a more emollient tone but behind the scenes, both sides braced arguments over the breakup for months.
"We have had productive but ultimately unsuccessful negotiations over the past several months ... We all aimed to resolve those by the initial date of termination, but this did not happen, "said Boeing senior vice president Marc Allen in a statement.
The rift stops the second half of a major reshaping of the global duopoly between Boeing and Airbus as both companies were seeking expansion into regional jets. In 2018, Airbus purchased the Canadian CSeries, and renamed it A220, which sold well.
Industry sources say that Boeing has been interested in Embraer primarily for access to low-cost engineers and new manufacturing options, but is now considering cutting 10 percent of its workforce while also seeking U.S. federal assistance for the aerospace sector.
The feud also breaks a previously close relationship between two of the world's top three planemakers, who have taken similar positions with Europe and Canada on trade battles.
"This is not the kind of statement that you see very often in this industry," said Richard Aboulafia, consultant for Teal Group.
The deal calls for a $100 million breakup fee but Embraer is poised to sue Boeing for significantly more, claiming its E2 jets have been hampered by the long period of uncertainty.
It said, without elaborating, that it would pursue "all remedies" against Boeing.
FINANCIAL, PAPERWORK DISPUTES
In addition to the trade aviation deal, a separate joint venture is also off to find new markets for Embraer's KC-390 military cargo plane. But the KC-390 signed in 2012 will remain a simpler deal to "market and support."
Reuters first reported the prospect of an abrupt collapse on Friday after sources reported slow progress in talks before a midnight cut-off with hours left over.
Plans for simultaneous announcements were abandoned on Saturday after Reuters quoted sources as saying Boeing had late Friday notified Embraer that it would refuse to extend the midnight deadline, effectively blocking the deal.
People familiar with the matter said that during talks on funding and legal matters, Boeing had raised objections, which Embraer considered a deliberate bid to frustrate the deal.
Others said the dispute was about how much Embraer had invested in the commercial aerospace unit pending a final deal, as well as technical and contract paperwork progress.
Embraer said it was fulfilling its obligations.
The deal had already faced hiccups of antitrust, but sources close to the talks said they did not wreck the deal in the end. Although the transaction received antitrust approvals from most countries, a decision was delayed by the European Union until August.
Analysts expect Embraer to move swiftly to reassure investors over its finances, which has called the tie-up crucial for its future. It ended with $2.3bn in cash in 2019.