The 30-year-old, who came second in Celebrity Big Brother earlier this month, is said to have received the news on the day she was granted a divorce from second husband Mark Croft.
Talks between the broadcaster and Katona's management broke down, according to The Sun, with an undisclosed contractual dispute said to have led to the project being canned by ITV2.
An ITV spokesperson told the paper: "We have enjoyed working with Kerry on two successful series of The Next Chapter, but we do not have any further episodes planned."
Katona's spokesman Max Clifford commented: "It is a shame as Kerry wants to be on TV, and after her success on Big Brother people obviously want to see her. But with the ITV deal she was caught up in something that was beyond her control."
With neither party present at London's High Court, the former Atomic Kitten star and second husband Croft were granted a divorce on the grounds of each other's unreasonable behaviour yesterday.
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Watch Kerry Katona discuss her reality show The Next Chapter with Digital Spy below: