Dappy, Fazer and new X Factor judge Tulisa Contostavlos were informed this week that their deal had come to an end, after clashing with bosses over their creative direction, The Sun reports.
The issues are said to have started when Antonio 'L.A.' Reid, the man who helped signed them, left the label to join The X Factor USA. New bosses apparently tried to mould the band into a pop act.
Dappy said: "They might say they've dropped us but we were never going to co-operate with them when they decided to change what we are. If we had co-operated we would still be signed. But I stuck my finger up at them when they wanted us to make another Being N-Dubz TV show.
"Tulisa thought we should do it because we could make some money out of it, but I said no. For them to say they dropped us makes me angry because we just didn't want to change who we are or what we do. We're not just a silly bunch of pop tarts."
A label spokesman confirmed: "N-Dubz have left the Def Jam imprint in the USA due to creative differences over musical direction. This was 100 percent the band's decision and they remain signed to Universal worldwide."
Meanwhile, Contostavlos has reportedly signed a solo deal with Island Records, which contains a clause for Def Jam to get first refusal on a US contract.
Dappy is currently working on his solo career and recently released the music video for his new single 'No Regrets'. Fazer's solo project is being touted as the British version of Timbaland's Shock Value.
Watch an exclusive clip of N-Dubz performing a mash-up of Jay Sean's 'Down' and Black Eyed Peas' 'Meet Me Halfway' below: