Plans for a £500m bypass have been abandoned due to lack of "political support".
Suffolk County Council's cabinet has voted against the Ipswich Northern Route proposal because it would "not attract the funding needed".
Local authorities failed to agree on plans for additional housing needed for local funding of the £500m project.
Protesters argued the road would have disastrous environmental effects without reducing congestion.
Matthew Hicks, leader of the Conservative-run county council, said: "I am disappointed that even with a good Strategic Outline Business Case, we have been unable to proceed with this ambitious project for Ipswich.
"However, ambition must always be tempered with reality.
"Without widespread political support this project will not attract the funding needed to proceed to the next stage, let alone the £500m necessary to complete it."
The cabinet agreed to create a task force to work on improving congestion in Ipswich.
There were three proposed routes for the road which would link the A14/A140 and the A12.
More than two-thirds of people who took part in a consultation on the proposed bypass were against it, it was revealed last month.
Protesters previously said building the scheme would destroy the countryside, increase pollution and would cost the taxpayer millions of pounds without reducing traffic.
Mr Hicks said: "I hope that today's decision to not proceed with the Ipswich Northern Route will help those who felt directly impacted by any of the three proposed routes to find some closure and move on."