The daytime drama about the residents of Ramsay Street has been shown on UK television for more than 30 years and launched the careers of stars including Kylie Minogue, Jason Donovan and Margot Robbie.
Channel 5 said dropping the soap will allow funding to be diverted to original UK dramas.
A spokesperson for the channel said: “Neighbours will no longer air on Channel 5 beyond this summer.
“It’s been a much-loved part of our schedule for more than a decade, and we’d like to thank the cast, Fremantle and all of the production team for their fantastic work on this iconic series.
“We’d also of course like to thank the fans for their loyal support of Neighbours across the years.
“We recognise that there will be disappointment about this decision, however our current focus is on increasing our investment in original UK drama, which has strong appeal for our viewers.”
The soap, which launched in 1985, has long been more popular in the UK than in Australia, so the news has thrown the future of the show into doubt.
The longest running drama series on Australian television, Neighbours initially launched on Australia’s Seven network in 1985, but the channel axed it before Ten picked it up the following year and it became an international hit.