The French club announced Saturday that negotiations have broken down and it has terminated discussions with the Premier League side over the 24-year-old's transfer.
Furthermore, Lyon states Fekir will remain with the side for the upcoming season, despite interest in the France international from other clubs.
Fekir's move to Liverpool had reportedly been in the works for several weeks, and both clubs were said to have agreed on a £53-million fee earlier this week. Fekir apparently even settled on new personal terms with the Reds, though the switch supposedly hit a snag due to issues surrounding his medical exams.
It's unclear what exactly concerned Liverpool in the tests, though Lyon's captain did miss seven months of the 2015-16 season after tearing ligaments in his knee in a September 2015 friendly against Portugal. He also missed just over a month of this past season due to a knee contusion.
Fekir was named to France's 23-man World Cup squad by manager Didier Deschamps and is currently with the international side preparing for the tournament in Russia.