Andersen was indicted on one count of obstruction of justice for the shredding of thousands of documents related to questionable accounting practices employed by the former energy giant, which filed for bankruptcy Dec. 2.
The Wall Street Journal reported late Thursday the talks broke off as efforts to settle civil litigation also began to unravel.
"We are no longer in talks with DOJ and nothing is planned in the immediate future," Andersen attorney Rusty Hardin told the Journal.
The Journal reported a dispute between lawyers for Enron shareholders and creditors erupted over the fine print of a proposed $300 million settlement of civil claims arising from Andersen's Enron audits. The settlement was said to be the linchpin of efforts to settle the Securities and Exchange Commission's investigation into Andersen's conduct.
The Justice Department was attempting to work out an agreement that would have incorporated a series of reforms.
Andersen is scheduled to go on trial in Houston May 6. In another case, Andersen faces a civil suit in Phoenix over its handling of audits for the Baptist Foundation of Arizona April 29 after backing out of a $217 million deal to settle the case.
On Wednesday, a class action suit on behalf of 7,000 Andersen employees fired last week was filed in Chicago against the embattled accounting giant, saying the firings were illegal because Andersen failed to give 60 days notice under a federal law designed to prevent surprise plant closings.