The 24-year-old had looked set to complete a move to West Ham this week, having undergone a medical with the club over the weekend.
However, according to L'Equipe, the deal is now dead in the water and Sakho has returned to France.
West Ham thought they had agreed a £3.5m fee for the striker, who was the top scorer in Ligue 2 last season, but Metz have apparently changed their demands to a loan-to-buy deal with an option to purchase the player outright next summer.
The news will come as a blow to manager Sam Allardyce, who is on the lookout for attacking reinforcements following Andy Carroll's four-month long ankle injury.
