Michut was set to join Sunderland and was even in the stands at the Stadium of Light for their weekend Championship clash against Norwich City.
An issue though has come up, with PSG wanting a clause adding to the agreement at the last minute, which was not acceptable for the Black Cats.
As such Michut has now returned to France and will head back to training with PSG.
The transfer window is still open and it remains to be seen whether Sunderland look to bring the deal back to life or PSG have a rethink on the clause demand.
Sunderland are currently without a manager after Alex Neil left the club to take over at Stoke City.
The Stadium of Light outfit are on the hunt for a new manager, but it is unclear if whoever walks through the door will have the chance to work with Michut.
The highly regarded French midfielder was also linked with Celtic earlier this summer, with the Scottish champions making an initial enquiry but then not following up.
