The Netherlands has formally withdrawn its ambassador to Turkey and said no new Turkish ambassador will be accepted in The Hague.
The decision marks the deepening of a row that began when the Dutch barred Turkish ministers from campaigning among the Turkish diaspora in 2017.
The Dutch diplomat has not been allowed to enter Turkey since March.
The Netherlands foreign ministry also said that it had "paused" talks on resolving matters with Turkey.
"We have not agreed on how to normalise ties," Foreign Minister Halbe Zijlstra said in a statement.
The two Nato allies originally fell out over the Netherlands' decision to block the entry of Turkish officials who wanted to hold rallies ahead of a referendum in Turkey on expanding the president's powers.
One minister arrived by car from Germany to attend a rally in Rotterdam in defiance of the ban, but police escorted her out of the country. Riot police were then deployed in the city to break up angry demonstrations by Dutch-Turkish citizens.
At the time, Dutch voters were set to go to the polls for a general election and Prime Minister Mark Rutte cited security concerns ahead of the vote to justify the decision.
Similar rows took place elsewhere in Europe, with Turkish officials also blocked from holding rallies in Germany, Austria and Switzerland.
Turkish President Recep Tayyip Erdogan responded furiously, saying: "Nazism is still widespread in the West."
The Turkish government banned the Dutch ambassador, who was on holiday at the time, from returning.
The unprecedented diplomatic crisis caused the Dutch foreign ministry to issue a travel warning last year, urging its citizens in Turkey to take care and noting the new "diplomatic tensions".
The formal withdrawal of the Dutch ambassador is a sign of how deep the rifts remain between Turkey and some European countries that have lambasted the Turkish government for arresting tens of thousands after the failed July 2016 coup, clamping down on free speech and lashing out at any western criticism, says the BBC's Mark Lowen in Istanbul.
He adds that 13 years ago, Turkey started negotiations to join the EU, but today it has no ambassadorial ties with one of the bloc's founding members.
The Netherlands is the biggest foreign investor in Turkey.