The firm announced that the Xbox Live Arcade and PlayStation Network title will not see a release due to "various reasons".
First announced last year, the title was billed as a "revolutionary" take on the franchise, and would feature guest appearances by Ghouls 'N' Ghosts protagonist Arthur and Street Fighter's Ryu.
"This game will break the mould and challenge the conventional wisdom of what a Mega Man game can be," said former R&D lead Keiji Inafune at the time.
"When fans finally get to see it, I believe they'll envision their most far-out Mega Man dreams coming true."
The last title in the series, Mega Man 10, was released on several downloadable platforms in early 2010.
Watch the announcement trailer for the abandoned Mega Man Universe below: