The Muratti Vase has been cancelled for the second successive year due to Guernsey's Covid-19 travel rules.
The annual tournament between Jersey, Guernsey and Alderney was cancelled in 2020 for the first time since World War Two due to the pandemic.
Guernsey's rules require anyone coming to the island to self-isolate for a week, ruling out travel for the game.
Matches at women's and youth levels between Jersey and Guernsey sides have also been cancelled.
"This was a disappointing decision for the committee to take, but the only practical and realistic one that could be taken in light of the circumstances," Jersey Football Association and Inter-Insular Committee president Bradley Vowden said.
"We have left this difficult decision as long as possible in order to provide the players from the Channel Islands the opportunity to play in these historic fixtures.
"However, the timescale for inter-island travel to resume without restrictions remains uncertain, and we have therefore now reached the point whereby it would be too difficult to successfully organise and host the various fixtures before the end of the season on 30 June."
Last month the authorities delayed a decision on this season's match as they awaited more clarity on the travel situation between islands.
But Guernsey is still requiring a minimum seven-day isolation period and mandatory Covid-19 tests, so any match between the two amateur sides is unfeasible as players, coaches and support staff would have to isolate either before a game in Guernsey or after returning from a match in Jersey.
There was controversy earlier this month when British and Irish Lions head coach Warren Gatland was given special dispensation to come to Guernsey without isolating in order to look a possible training facilities - he later chose Jersey for their pre-tour camp.
Both Jersey and Guernsey have restarted their domestic football leagues after shutdowns due to rises in cases, while Jersey's Football Combination side travelled to Dorset on Tuesday for their victorious FA Inter-League Cup semi-final after the island relaxed travel rules.
The match cannot be delayed until the start of next season as it would impinge on the fixtures of Jersey Bulls and Guernsey FC, who both play in the English league system.
Guernsey FA chief executive Gary Roberts said: "The committee remains fully committed to Inter Insular football and looks forward to ensuring these fixtures resume at the earliest opportunity, which will be when it is both viable and safe.
"The committee remains hopeful that the situation in the Channel Islands will continue on the current positive trajectory, which will enable these historical fixtures to return to the football calendar in the 2021 season."
Jersey won the men's Muratti when it was last played in 2019 - they beat Guernsey 3-1 on penalties after a 0-0 draw.
Jersey have won the title 56 times, with Guernsey having been victorious on 47 times and Alderney's solitary win came in 1920 when they beat Guernsey 1-0 in St Helier.