The Middlesbrough midfielder held talks with Ipswich officials after an offer of around £20m was accepted for his services.
Hackney is understood to have travelled to Suffolk in the last 48 hours to discuss a proposed move to Ipswich.
However, the England Under-21 international has opted against a move to Portman Road despite Ipswich offering a significant increase on his current wages at the Riverside.
He has conveyed his decision to Middlesbrough officials, who have now brought their talks with Ipswich to an end.
Middlesbrough have always insisted they would be happy with Hackney opting to remain with his hometown club, and the 23-year-old will now focus on preparing for the start of the Championship season.
There is, of course, a chance that other clubs could make an offer for the midfielder before the end of the transfer window, although as things stand, Ipswich remain the only club to have made a formal approach for Hackney this summer.
Hackney, who missed last weekend’s friendly draw at Rangers, has been named on the substitutes’ bench for today’s pre-season friendly with Deportivo La Coruna.
