Instead, the university said, the team will "make the most of the coming year" to implement new measures that will provide student athletes with "better guidance."
The decision comes just days after a class-action lawsuit over the team's suspension was launched against the university and its president on behalf of 22 players.
Two students who were on the team, and are not part of the class action, were charged last summer with sexually assaulting a female student at Lakehead University in Thunder Bay, Ont., in February.
Almost a month after the alleged incident, the entire hockey team was suspended for the season.
That suspension will now continue at least until the 2016-2017 season, which is when the university says it aims to relaunch its men's hockey program.
"The university does not wish to field a less-than-competitive team whose performance would not meet the expectations of the university community," the university said in a statement.
Following the initial suspension of the team, the school launched an internal investigation and said it would implement new behaviour guidelines. That probe was in addition to a wider report on respect and equality on campus, which the university said it was looking forward to.
"Even though we have reviewed some of our practices and procedures, we feel it is essential to wait for the Task Force on Respect and Equality to submit its report, which is expected shortly," University President Allan Rock said in a statement on the team's extended suspension.
"Given these circumstances, we feel that this is the best decision."
The announcement came as a shock to team members who were part of the class action against the university, their lawyer said.
"It's a vindictive decision which adds more damage to the injuries they've already caused to these young men's lives and careers," said Lawrence Greenspon.
"There's a number of the players who stayed at the University of Ottawa on the understanding and on the word of Mr. Rock that there would be a 2015-2016 hockey season. And the university has now gone back on its word."
Greenspon added that he thought the university's reasons for not allowing the team to play for another season were "spurious at best."
The results of the university's internal investigation into the team were not made public last year but did prompt the university to fire the team's head coach, Real Paiement. Rock said the coach was not involved in the misconduct but should have notified authorities about the allegations.
The university said it is now looking for a new coach and will also need to recruit more than 20 "high-calibre" student athletes in order to perform well.
The suspension of the team has been a controversial matter ever since it was first announced.
Rock has acknowledged that innocent members of the team have been tarred by the scandal which rattled the university community.
"The shadow cast by the allegations of misconduct has affected all members of the team, some unfairly," he said in June.
It was that sweeping tarnishing of reputations that led to the class-action lawsuit being launched, Greenspon has said.
The suit is seeking $6 million in damages and, if certified, could take years to be settled.
Meanwhile, the case of the two team members who were charged is working its way through the legal system.
Guillaume Donovan, 24, and David Foucher, 25, both of Gatineau, Que., were each charged last August with one count of sexual assault.
Police said the alleged assault of a 21-year-old woman took place in a hotel early on Feb. 2, but authorities were only informed of the incident on Feb. 25, when a third party came forward with a complaint.