Steve Ballmer, Microsoft's chief executive, appeared to end recent speculation about a fresh takeover bid while unveiling a preliminary version of the next Windows operating system, Windows 7, in Las Vegas.
Ballmer told the Fox Business Network: "You certainly shouldn't think we'll go back after Yahoo!. We may try to do other kinds of partnerships with them, but acquisition is a thing of the past."
His remarks follow speculation this week suggesting that an investment group led by US technology sector executives was trying to revive Microsoft's takeover deal of Yahoo! with a new structure.
Blogging site Tech Crunch said the investors were looking to borrow $20bn from Microsoft to buy Yahoo! for about $15 a share.
However, subsequent reports dismissed the possibility of such a deal, citing unnamed sources who said Microsoft was not discussing any financing plan.
Yahoo!'s share price has recently collapsed and its market value is down to $17bn (£11.2), which is less than 40% of the $44.6bn that Microsoft offered to acquire the company in early 2008.
After the offer was rejected by Yahoo!, Microsoft subsequently proposed a search deal that would see the internet firm give Microsoft control of its search engine and search ad business in return for an up-front payment and a cut of any future ad revenues.
Microsoft is still keen for a search deal to go through and Ballmer said that the best time for this to happen was during the current management transition at both companies.
The software firm hired Qi Lu, Yahoo!'s former search chief, in late 2008 and Yahoo! is still searching for a replacement for Jerry Yang, who stepped down as chief executive in November last year.
Ballmer told the Financial Times: "We had a deal on the table that they didn't choose to take, but I still think that makes sense. For us, the value to the customer, the value to the advertiser, all gets created around the search partnership."
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