Melco previously stated its ambition to obtain one of three casino licenses to be awarded in Japan, either in Yokohama or Osaka.
However, the operator is now moving its focus away from Osaka and will concentrate on large cities in Yokohama.
Melco Chairman and CEO Lawrence Ho said: "Our team is well-positioned to contribute to Yokohama’s future and support the community in its ambition to become a global tourism destination.
"I would like to thank the city of Osaka for their consideration and for constructive dialogues we have had with them.
"They demonstrated a very professional approach in their commitment to build an IR in Yumeshima."
Melco joins Las Vegas Sands in ending its Osaka interest, while Caesars Entertainment recently halted its overall pursuit of a Japanese license.
MGM Resorts International, which previously unveiled its Osaka-first plans, is a strong contender for an integrated resort license in Osaka and could raise funds for its bid by selling the real estate to the Bellagio and MGM Grand.
In August, Melco became the official partner in Japan for English Premier League football club Manchester City.
