A letter dated Wednesday from Aboriginal Affairs Minister Bernard Valcourt said the group failed to hold an assembly by the end of September "due to ongoing internal governance issues."
He said the group was required to do so under its funding agreement.
All payments are to be halted Nov. 1.
"It is my hope that Metis Nation-Saskatchewan finds a way to effectively and efficiently give the Metis people of Saskatchewan the governance that they deserve — one which is transparent, accountable and democratic," Valcourt wrote in the letter addressed to the Metis group's president, Robert Doucette.
"I also firmly believe that taxpayer dollars are to be used wisely and for the benefit of all Canadians."
Calls to the Saskatoon office of Metis Nation-Saskatchewan were not answered.
Protesters picketed last year outside the office calling for Doucette's resignation. At the time, the group's vice-president said several council members were concerned about an overhaul of the group's governance structure and that Doucette was acting secretive.
Gerald Morin also said the group was supposed to hold a council meeting every two months but hadn't had one in more than five months.
Doucette came out of his office and faced the crowd but was drowned out by chants.
Documents obtained earlier this year by The Canadian Press revealed that the Saskatchewan group and Metis Nation British Columbia were audited in 2012 after questions arose about their management and finances.
The Saskatchewan audit raised questions about executive compensation and travel, while the B.C. audit found conflicts of interest and expenses that should have been ineligible for federal funding.
Both organizations say that they have since dealt with the issues raised in the audits.
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