Roberto Azevedo said diplomats from the WTO's 159 members tried hard but "cannot cross the finish line here in Geneva" ahead of a summit where ministers were to have signed the deal in Bali, Indonesia next week.
He said more progress was made in the past weeks than over the past five years, but that was still not enough.
"We are indeed close, but not quite there," he told a news conference.
The negotiations would have eased the rules of global commerce by cutting red tape to open markets and help develop poorer economies. They also focused on tariff quotas, government incentives for exports and agriculture issues such as subsidies for grain stockpiling.
But disputes between major economies such as the United States, the European Union, China and India bogged down the discussions. The main disagreements were over cutting customs red tape, opening the agricultural sectors to competition and support for the least developed economies.
Deputy U.S. Trade Representative Michael Punke expressed "a great deal of sadness" over the failure.
"We're worried - alongside so many in this room - that a once-in-a-generation opportunity may have slipped our grasp," he said.
Some diplomats, like Moroccan Ambassador Omar Hilale, held out hope that negotiators could still reach a deal in Bali. But most said it was too late.
Azevedo said there remains so much disagreement that several more weeks of negotiations could not close the gaps.
"Holding negotiations in the short time we'll have in Bali would be simply impractical with over 100 ministers around the table," he said.
The Bali summit has been cast as a last chance to revive the so-called "Doha Round" of WTO-brokered talks that began in Qatar in 2001 and frustrated Azevedo's predecessor, Pascal Lamy.
The lack of a global trade deal has not prevented individual countries from making deals among themselves. The European Union, for example, has clinched free trade deals with South Korea and later Canada. It is in separate talks with the U.S. and Japan as well.
But Azevedo said the failure to reach a global deal leaves poorer countries worse off.
It also hurts the WTO's credibility. The WTO will only be viewed as a trade court and no longer as a forum for governments to negotiate trade agreements, he said.
"We will fail not only the WTO and multilateralism," he said. "We will also fail our constituencies at large, the business community and, above all, the vulnerable among us. We will fail the poor worldwide."