The actress had been keen to produce a Bollywood version of the 2006 movie Priceless, starring Amelie actress Audrey Tautou.
Priceless centres on a young gold-digger who woos a bartender after falling under the impression that he is a millionaire.
A source told Mumbai Mirror: "She gave lot of time and energy to this project.
"She had even thought of a few directors who could handle the subject beautifully. She has every reason to be exasperated now. She has given up on the film."
They added that she was still keen on producing a foreign update despite the setback.
Kaif recently announced plans to produce her younger sister Isabel's Bollywood debut.
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