Enlargement Commissioner Olli Rehn postponed the talks on a stabilisation and association agreement, seen as a first step to joining the EU, mainly because Mladic, the former Bosnian Serb army chief wanted for genocide, was still at large.
Chief UN war crimes prosecutor Carla Del Ponte lashed Belgrade and accused Serbian Prime Minister Vojislav Kostunica of delivering an "unacceptable" and "double-faced" call for Mladic to give himself up.
She said she was "particularly disappointed" by the failure to catch Mladic despite Serbian assurances he would be in custody in the International Criminal Tribunal for former Yugoslavia (ICTY) in The Hague by April 30.
The commission's announcement sparked the resignation of Serbia's deputy prime minister, Miroljub Labus, who was a key negotiator with the EU.
"This (failure) has betrayed one of the most important interests of the country and the people of Serbia," he said. "As the deputy prime minister and chief of the negotiating team, I don't want to take part in this government."
Negotiations uncertain
The next round of the EU's negotiations with Serbia and its federal partner Montenegro had been scheduled for May 11 and Mr Rehn gave no indication when the process so coveted by Kostunica's government might resume.
"It is disappointing that Belgrade has been unable to locate, arrest and transfer Ratko Mladic to The Hague," Mr Rehn told reporters.
"The commission has therefore decided to call off the negotiations on the stabilisation and association agreement. The commission is ready to resume negotiations as soon as Serbia achieves full cooperation," he said.
He said he made the decision after telephone talks with Ms Del Ponte. "Her assessment is negative," he said.
Mladic and Bosnian Serb wartime political leader Radovan Karadzic are wanted for genocide, war crimes and crimes against humanity and have been at large since 1995.
The genocide charges relate to their roles in Bosnia's brutal 1992-1995 war, notably the Srebrenica massacre of an estimated 8,000 Muslim men and boys.
Serbia denies knowing where Mladic is, but recently admitted he had been under military protection until mid-2002 and received a pension until December.
In Belgrade, Mr Kostunica urged Mladic to give up for the sake of his country.
"It would be best of all for Ratko Mladic to follow the example of all other officers and go to The Hague," he said in a statement. "It has never happened in our history that the people and the state have paid the price for the mistakes of just one officer," he said.
But Ms Del Ponte sharply criticised Serbian authorities for appealing to Mladic to surrender, a tactic she said was "completely unrealistic and simply wrong".
"The obvious conclusion is that I was misled when I was told at the end of March that the arrest of Mladic would be a matter of days or weeks," she said at a press conference.