Team president and CEO Paul Beeston told the New York Post that Halladay does not want to sign an extension and will become a free agent next offseason.
"We would like to sign him, he is an original Blue Jay and we have never had a pitcher as good as him," Beeston told the Post. "But he is not inclined to sign with us.
Former Blue Jays general manager J.P Ricciardi publicly made Halladay available before the trade deadline, but did not receive a proposal attractive enough to sway Toronto to part with the six-time All-Star and 2003 AL Cy Young Award winner.
Ricciardi was fired in October.
Halladay had a 17-10 record in 32 starts with a 2.79 ERA this season.
The Associated Press contributed to this story.