The Canadian company entered into early stage talks with Norfolk Southern - the second-largest railroad in the eastern US and valued around $25 billion - late last year.
"We have long recognized that consolidation is necessary for the North American rail industry to meet the demands of a growing economy, but with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders," said CP's CEO, Hunter Harrison, in a statement.
CP is Canada's second-largest railroad and made headlines in 2011 and 2012 when activist investor Bill Ackman acquired about 14% of its stock and uprooted the company's board and management.
Ackman's Pershing Square is the second-largest shareholder in Canadian Pacific, after T. Rowe Price Associates.
Last year, CP tried to merge with another US railway, CSX Corp, but talks failed.