The programme's future on ITV1 had been the subject of intense speculation for some time.
ITV confirmed it had decided not to commission any further series of Taggart for the ITV network.
Programme producers STV said they were exploring a range of options with other broadcasters to keep Taggart going.
The company said it was committed to the brand and recognised the continuing popularity of this long-running series.
It is believed the company will look at possible co-financing deals with other UK-based channels or foreign broadcasters.
An ITV spokesman said: "Since it was first broadcast in 1983, Taggart has been one of ITV's most enduring dramas but, reflecting the demands of our audience and as part of the ongoing creative renewal of the ITV1 schedule, our priority is to invest in new and original drama for the channel."
He added: "ITV1 broadcast five out of the top 10 new dramas on any channel last year, including the most popular new drama in over five years, Downton Abbey.
"A broad range of new drama series premiering on the channel over 2011 includes Marchlands, Vera, Injustice, Scott & Bailey, The Jury and DCI Banks."
Two years ago, Taggart came close to being axed but STV and ITV worked out a co-production deal.
This meant that STV paid a significant proportion of the production cost itself but also gained the right to screen the series before it was shown across the network.
Previously STV had simply been commissioned by ITV to make the series and it was shown across the whole of the UK simultaneously.
The most recent series was shown in the STV region last autumn while viewers in the rest of the UK saw the acclaimed costume drama Downton Abbey. Taggart's ratings within the STV region remained strong.
But when the series was shown on the network a few months later, it was a different story. Taggart's ratings across the UK fell to 3.8 million for the most recent series - considered poor for a mainstream drama.
In recent years, ITV has axed a number of long-running dramas - notably Heartbeat and The Bill - to put more effort into bringing new shows to the screen.
Although Taggart had lost its popularity on ITV1, it remains popular in Scotland and is important to STV commercially and the television industry in Scotland.
For instance, STV generates money from Taggart through sales to foreign broadcasters - over the years it has been screened in many countries around the world.
Distributor DRG said Taggart was a "hugely popular" series internationally, airing across three different TV channels in Australia alone.
A DRG spokesperson added: "It's our shared ambition to return Taggart to UK screens and we can confirm we're currently working closely with STV as we explore options to achieve this."
ITV did recently commission another drama from STV - a 90-minute one-off called Fast Freddie, The Widow and Me, which is expected to be shown over Christmas.
STV and ITV recently ended a long-running legal dispute amicably. The dispute was triggered by STV's decision to drop a number of ITV network programmes but touched on many other matters.
ITV sources are stressing the decision to discontinue Taggart was a purely creative decision, completely unconnected with the dispute.
ITV has axed the Scottish police drama Taggart after 28 years, in the wake of poor viewing figures south of the border.