Chelsea have reportedly withdrawn their interest in Isco because the Real Madrid midfielder has showed no desire to join the club.
The Spain international emerged as a potential £75m target for the Premier League side earlier in the season after falling out of favour under new Madrid boss Santiago Solari.
Isco is on the periphery at the Bernabeu and appears to be on his way out in January, with Manchester City, Juventus and Paris Saint-Germain also being touted as possible destinations.
According to The Sun, however, the 26-year-old now has one less club to choose from as Chelsea have pulled the plug on a proposed deal.
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The report suggests that Isco demanded more money, despite the Blues offering to pay the player and his agent healthy signing-on fees to drive the transfer beyond the £100m mark, using interest from PSG to help their cause.
Maurizio Sarri is said to be disappointed by the development, but the Italian is still expected to bring in Christian Pulisic from Borussia Dortmund in the near future.