The deal had been opposed by US regulators, because of fears it would leave consumers with too few choices.
Electrolux - the world's second-largest appliance maker - was looking for a way to increase its presence in the US.
In a statement, GE said it would "pursue other options to sell the appliances business".
GE has been taking steps to slim down and focus on core businesses like energy generation.
Under the terms of the original agreement, Electrolux must pay GE $175m for the break-up of the deal.
The companies announced the transaction in September 2014.
After the sale was announced, the US Justice Department sued Electrolux and GE, saying the deal would adversely affect buyers of ovens, stoves and other such appliances.
Electrolux would have controlled 40% of the US market if the deal had gone through.
"This deal was bad for the millions of consumers who buy cooking appliances every year. Electrolux and General Electric could not overcome that reality at trial," said deputy assistant attorney general David Gelfand of the Justice Department's anti-trust division.
General Electric has announced plans to terminate the $3.3bn (£2.2bn) deal to sell its appliances unit to Swedish manufacturer Electrolux.