The couple announced their engagement in December 2010 after the 85-year-old proposed to the 25-year-old on Christmas Eve.
The wedding, which would have been Hefner's third marriage, was scheduled for June 18, but the nuptials have now been cancelled in the wake of a reported row between the two.
Hefner confirmed on Twitter: "The wedding is off. Crystal has had a change of heart."
Playboy Playmate Harris said in a statement: "After much deep reflection and thought I have decided to end my engagement with Hef. I have the utmost respect for Hef and wish him the best going forward. I hope the media will give each of us the privacy we deserve during this time."
Harris moved out of the Playboy Mansion in which the two reside following a fight with Hefner over the weekend, according to TMZ.
Harris and Hefner said in early May that they did not want any wedding gifts, suggesting that well-wishers make donations to selected charities instead.
The Playboy founder recently described himself as "consistent", stating that he has been dating 20-year-old girls for most of his life.
Hefner claimed over the weekend that he does not believe in monogamy in spite of the fact that he was due to marry Harris.