Low ticket sales for their latest tour and Ronan Keating's affair with a dancer were blamed for the move, the News of the World reports.
"Louis has told Boyzone they're finished. Ronan doesn't want to accept it but without Louis they have no chance," a source said. "The affair changed everything for many fans. It destroyed the family-friendly image that made the band popular.
"They kept a diehard fanbase but the 'Brother' tour earlier this year wasn't a big success. Louis didn't bother seeing a single show. [They] just couldn't compete with the Take That comeback and lots of tickets weren't sold. So Louis decided it was the right time for the band to finish."
However, a close friend of Keating's insisted that Boyzone will stay together, saying: "Despite what Louis might say, in the end he had very little to do with Boyzone - and the last tour was actually a success."
The band included a tribute to Stephen Gately in their 'Brother' tour, following his death in Majorca in 2009.
Watch the music video for Boyzone's 'Love Is A Hurricane' below: