The 37-year-old, who is running for a senate seat in his native Philippines, later apologised for his comments.
"We find Manny Pacquiao's comments abhorrent," said a Nike statement.
"Nike strongly opposes discrimination of any kind and has a long history of supporting and standing up for the rights of the LGBT community."
The sportswear company added: "We no longer have a relationship with Manny Pacquiao."
Pacquiao's original remark was made in a television interview and he initially appeared unrepentant, writing on Instagram that he was "just telling the truth of what the Bible says".
However, he later wrote on Facebook he was "not condemning LGBT", while still voicing his opposition for gay marriage.
Pacquiao, whose last fight was a defeat by Floyd Mayweather in May, is due to fight American Timothy Bradley Jr in Las Vegas in April.
British world heavyweight champion Tyson Fury apologised in December for criticising homosexuality, as well as derogatory remarks he made about women.
But boxing promoter Frank Warren told BBC Radio 5 live that the sport did not have a problem with homophobia.
"No matter what walk of life you come from there are bigots," said Warren. "I don't think it's a problem for boxing. In Tyson Fury's case I hope it was something he said on the spur of the moment. He regrets it.
"You can't condemn all of sport because of people's stupid remarks. They are two boxers out of many thousands of boxers.
"Pacquiao's certainly lost any type of sponsorship. That's all finished. No-one's ever going to sponsor him again.
"The majority of the fans will be totally abhorred about what he said, but that is going be the test - how many people decide they want to watch him fight."
Nike has terminated its relationship with Manny Pacquiao after the six-weight world champion described homosexuals as "worse than animals".