The FDF announced in a statement that the squad and coaching staff have been disbanded as the focus shifts to promising youngsters.
The move comes after Djibouti lost 5-1 at home to Ethiopia in the first leg of their 2018 African Nations Championship qualifier on Saturday.
The FDF said there is no timeframe on the dissolution.
"As Team A has no result, we will focus on youth football," said technical director Omar Ali Mohamed.
"This is not about money problems. It is the new policy of the federation."
"Maybe we will participate in the next Under-15, Under-17 or Under-20 competitions."
An FDF statement said the decision was necessary due to 'the never-ending series of bad results' of the national team.
Ranked 185th in the latest Fifa's world rankings, Djibouti - nicknamed the Shoremen of the Red Sea - have never qualified for any major international tournaments.
The Djibouti Football Federation (FDF) has dissolved the national football team in a bid to 'stop poor results'.