The Dons were very keen on the Buddies star who is in the final months of his deal in Paisley.
A lucrative pre-contract offer had been made to McGrath which appealed to the Irish midfielder. It would have seen him become one of Aberdeen’s highest paid players.
The Scotsman understands that deal is no longer on the table after interest from clubs in the English Championship emerged.
A move south of the border is understood to be McGrath’s preference and with that the Pittodrie club have removed their contract offer.
It is believed Birmingham City and Wigan Athletic, who have just signed former Dons captain Graeme Shinnie, are keen on the player.
The possibility of a move to England piqued McGrath’s interest and led to the 25-year-old delaying committing his future to Aberdeen.
The St Mirren star was a key target this month with the hope a pre-contract agreement could lead to a January switch.
Buddies boss Jim Goodwin had confirmed the club had made their own lucrative contract to the player who joined in 2019 from Dundalk. St Mirren have reportedly put a £350,000 price tag on McGrath for any club wanting to sign him this month.
Aberdeen, who have already added American midfielder Dante Polvara, will now switch focus to other targets.
The club have been linked with Peterborough United’s Ryan Broom, while Ryan Hedges’ future is yet to be decided.
The Dons are back in action on Tuesday when they face Rangers at Pittodrie.