One of the adjudicators, South African Justice Steven Majiedt said they had no alternative but to "terminate these proceedings."
ICC president Ehsan Mani labelled the events in Zimbabwe as 'disappointing'.
"I am disappointed that the hearing did not go the distance. I would prefer to have had the oral evidence heard by the two-member panel but this has now proved impossible," said Mani.
"I will now await the report into the allegations from the panel."
That report will now be considered at the ICC executive board meeting set for Pakistan on October 16 and 17.
The impasse was caused when the ZCU demanded that three of its directors should be allowed to hear what the players had to say.
The players - former captain Heath Streak, batsman Stuart Carlisle and all-rounder Trevor Gripper - refused to accept this condition.
Judge Majiedt said: "In view of the inflexible and incalcitrant attitudes adopted by the two parties we have no alternative but to close this hearing."
Acting for the ZCU, Norman Arendse asked whether he and Chris Venturas, who represents the players, could nevertheless hold a one-on-one meeting to try and address the problem.
It was agreed they could do so, but the two lawyers were required to notify the adjudicators of any decision later in the day or Friday when they will be in London.
The players and the ZCU had been told overnight by Majiedt and his colleague, the India solicitor-general Goolam Vahanvati, that they should meet and try to resolve the witness issue.
But no meeting took place.
The players were told at that time that it was they who wanted the hearings held 'in camera' but that their views and allegations were already well known. However the players said they nevertheless felt intimidated. The players actually wanted three particular and named directors excluded.
The ZCU felt it had a right to be present to hear what was being said against them.
Arendse said the ZCU had "bent over backwards" to try and see a way through the impasse.
"It was the ZCU which had always wanted the hearing to be held in public," he said.
"It has been the players who wanted it held in private."
Venturas was reprimanded by the panel for saying to the press and his clients in a public place at one stage that he had been "gagged."
Majiedt closed the hearing by saying to the two parties: "I see a good deal of goodwill between the players and the ZCU. You need each other. We cricket followers love to see the underdogs take on the favourites and you have done that. You need also seniors to bring on the juniors."
The issue of racism goes back to the beginning of the dispute, when Streak complained to the ZCU directors that their national selection panel, which included persons with no first class cricket experience, had chosen black players with lesser merit than whites.
He was immediately dismissed, resulting in 15 white players resigning when he was not re-instated and wre immediately sacked.
All subsequent efforts to resolve the issue only added to hostilities.
Meanwhile a "reserve" Zimbabwe XI has replaced them and have been given by the ICC until January to reach Test status.