The beauty brand will continue to be sold around the world in countries including the UK and Russia, but will be withdrawn from US drug stores and branches of Wal-Mart where P&G concentrated its efforts.
By dropping Max Factor P&G says it will be able to concentrate its efforts elsewhere primarily on its more successful CoverGirl brand, which is in a head-to-head battle with L'Oreal rival Maybelline.
The brand is sold in only an estimated 8,000 US stores, compared to CoverGirl, which is sold in more than 50,000 stores, according to P&G.
Virginia Drosos, president of global female beauty for P&G, said: "Max Factor is a strong, profitable brand and remains one of P&G Beauty & Grooming's key engines for global growth.
"P&G is fully committed to profitable growth and leadership -- both in the US and globally."
The dropping by P&G of the Max Factor brand comes 100 years after the company was founded in Russia by Maximilian Faktorowicz (Max Factor), a Polish-Jewish makeup artist for the Russian royal ballet.
It was his background working with performers that established the Max Factor name and its links with the entertainment industry and Hollywood in particular in the 1920s and 1930s.
He coined the term "makeup," based on the verb, "to make up" (one's face) and worked with the likes of Jean Harlow, Bette Davis, Joan Crawford and Judy Garland out of the Factor beauty salon near Hollywood Boulevard.
The man and the company were behind a number of innovations including lip gloss in 1930, Pan-Cake Makeup, forerunner of all modern cake makeups in 1937, and the first "waterproof" makeup in 1971.
More recently Madonna, Carmen Electra and Gisele Bundchen have all appeared as the faces of Max Factor.
P&G bought the brand in 1991 from Revlon for $1.5bn. The brand is active marketed in the UK and P&G recently launched a multibrand UK TV campaign, a first for the domestic market.
The 'Max Factor Makeover Break' took the form of a "real-life" makeover show, comprising three 90-second spots shown over consecutive ad breaks.
In the US the brand is handled by WPP Group's Grey Global Group and it is estimated to spend less than $40m, according to TNS Media Intelligence. Grey also handles CoverGirl.
Max Factor in the UK is handled by the Publicis Groupe-owned Leo Burnett