Borussia Dortmund defender is not putting pen to paper.
The 27-year-old had agreed terms on the deal after Boro and Dortumund agreed a deal which could have been worth up to £10million.
Boro had no worries about Subotic's proposed work permit appeal, but now the deal has hit the buffers due to issues with his medical which are believed to relate to the thrombosis in his arm that sidelined him for parts of last season.
HITC Sport understands that Boro are still in dialogue with Dortmund and the player, but for the move to go ahead it would need a major restructuring.
Boro's hierarchy will now look at other options with manager Aitor Karanka wanting an experienced top level defender in his squad, and it will also increase the need for the club to resolve the future of Daniel Ayala.
Talks have not gone well with their Player of the Year last season over his new contract, with his current deal due to expire next summer and doubts remaining over his long-term future.
Recent comments from Subotic's agent Frider Gamm suggest that the deal is still on so it may be a case of watching this space...