The rebuild of Tesco in Silver Street has been in the pipeline for several years but has now been abandoned, the supermarket giant has confirmed.
The scheme to almost double the size of the supermarket included demolition of the Ravenscourt Shopping Centre and the creation of a new market square off the main High Street.
Large numbers of traders have already left the shopping centre in preparation for the transformation and the news the project has been axed has now placed uncertainty over the regeneration of the town.
Some refurbishment was previously carried out at Brownhills Tesco leading to doubts the overhaul would go ahead, but Tesco has always insisted it was committed to the project.
However, it today admitted the replacement would not proceed with other stores being built in other areas of the region, including Wolverhampton, West Bromwich and Stourbridge.
Bosses say in total around 1,000 jobs are being created although it means the 150 new positions will not be offered in Brownhills.
Tesco spokesman Jonathan Simpson said: "Following a review we have taken the decision not to proceed with our plans to replace our popular superstore in Brownhills.
"We know that many of our customers will be disappointed with this news. We are pleased to have number of new stores planned in the West Midlands including Stourbridge, West Bromwich and Wolverhampton which will bring hundreds of new jobs to the area."