Shepherd was due to join Saints this month after his contract with Australian Super 15 side Western Force came to an end.
The 28-year-old Australian's arrival was subject to several conditions, however, and Northampton's medical team have vetoed the move.
Groin and wrist injuries plagued Shepherd in the recent Super 15 season and his frequent visits to the treatment table throughout his career have restricted him to just nine Wallaby caps.
"Obviously it is important to believe we will get the most out of our squad throughout the season," said Saints director of rugby Jim Mallinder.
"With a minimum of 32 games in Aviva Premiership Rugby, the Heineken Cup and LV= Cup, our campaign is the most demanding in the world.
"We obviously monitored Cameron's condition between signing his contract and his scheduled arrival and after great consideration felt that on balance we needed more certainty about his ability to handle the tough demands of our long season for the duration of his three-year contract.
"We know Cameron has ability and are confident that he will be with another club soon.
"But while we are disappointed that Cameron will not be joining us we are nevertheless very confident in the ability of our squad to compete in every competition this coming season."
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