According to a letter signed by two top officials at the McGill University Health Centre (MUHC), the land will likely be sold and used for residential development.
The MUHC intended for the lot at 1750 Cedar Ave. to be the home of outpatient clinics for general surgery, trauma, plastic surgery, cardiology and pain management.
"We appreciate that many in our internal community will be disappointed," said the letter, signed by the MUHC's CEO, Normand Rinfret, and board chairman, Claudio Bussandri.
Planners are working to identify another way to meet the needs of those patients, the letter said.
The letter said the hospital network failed to secure the support of neighbours and politicians for its plan.
City executive committee chairman, Michael Applebaum, released a statement saying he approves of the decision. He said the city has opposed the zoning change that would have made the clinics possible.
Applebaum said the project did not encroach on green space but said it contradicted the city's mission of protecting the Mount Royal neighbourhood.