The Australian band, whose lead singer is Bernard Fanning, were believed to be getting back together for a one-off performance in order to raise money for victims of the Queensland floods.
The band told The Daily Telegraph: "There have been some suggestions... for us to reform and play a charity concert, and while flattering, we would like to politely decline.
"We played together for the last time in November and intend to keep it that way. We do, however, want to help so we are currently planning to release a never-before-heard Powderfinger song.
"All proceeds [will go] towards raising the hopes and finances of those recovering from the disaster by donation to The Premier's Flood Relief Appeal. Stay tuned for more details."