Earlier this summer, the Spain international expressed a desire to remain at Real Sociedad despite being the subject of interest from the likes of Arsenal and Barcelona.
However, it was recently revealed that Liverpool were making an effort to convince the 25-year-old to leave San Sebastian this summer.
Real Sociedad insisted they would only part ways with Zubimendi if his €60m (£51.7m) release clause was paid in full.
Liverpool were believed to be pushing ahead in their pursuit after being given the initial impression that Zubimendi would be open to the transfer.
Zubimendi decides against Liverpool move
However, it was recently reported that Zubimendi was having second thoughts about whether to join Arne Slot's side this summer.
According to The Athletic, Zubimendi has now decided to remain at Real Sociedad, ending Liverpool's hopes of signing the Euro 2024 winner.
The Spain international has ultimately decided to turn down a Premier League move in favour of staying loyal to his boyhood club.
Zubimendi, who joined Real Sociedad at the age of 12, has made 188 competitive appearances for the first team, contributing eight goals and seven assists.
Having made a final decision over his future, Zubimendi is likely to be involved when Real Sociedad begin their La Liga campaign with a home game against Rayo Vallecano on Sunday.
What next for Liverpool?
Zubimendi's decision will come as a blow to Liverpool's new sporting director Richard Hughes, who is still waiting to make his first signing since joining the club earlier this summer.
Hughes will now have to quickly turn his focus to alternative targets, with the Reds keen to bolster their midfield ahead of the transfer deadline.
Liverpool have been linked with France international Adrien Rabiot, who is available on a free transfer following his exit from Juventus.
The Reds are also believed to be showing an interest in signing Genoa midfielder Morten Frendrup and are weighing up whether to make a move for the 23-year-old.