Jackson was found not guilty of rape last year, but the Irish Rugby Football Union still cancelled his contract in the wake of his related text and social media messages which emerged during the trial.
Irish international Jackson is joining the newly promoted Premiership club from French side Perpignan where he played in the season just finished.
Diageo said in a statement to the News Letter: “We have met with the club to express our concerns. Their recent decision is not consistent with our values and so we have ended our sponsorship.”
Drinks giant Diageo has over 200 brands in more than 180 countries, including Guinness and a range of Irish whiskeys, liqueurs and spirits.
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It was not immediately known last night how much the sponsorship deal was worth.
A London Irish spokesman told the News Letter that the club is “understandably disappointed” that Diageo has chosen not to renew its sponsorship agreement “and particularly the manner in which the company has chosen to do so”.
He added: “The club has always respected the right for everyone to have an opinion, and their right to express that opinion.
“London Irish has been open and honest with all of its sponsors, including offering to meet Diageo’s senior management in Dublin in May. This offer was not taken up.
“London Irish will be moving on without the support of Diageo, who have chosen to stand down after a nearly 30-year association with the club. It is regretful that this relationship has ended in the manner that it has.”
The news restarted the social media debate over Jackson’s career.
A female student journalist from NI said: “Can’t believe London Irish are standing by Paddy Jackson ... Fair play to the sponsors for standing up against misogyny...”.
But one London Irish supporter disagreed: “Paddy Jackson deserves to prove he is growing to be a better person. Diageo’s decision, while understandable, panders to the mob mentality of social media.”