Miroljub Labus, the Serbian deputy prime minister, resigned in protest at the government's failure to apprehend Mladic, describing it as "a betrayal of the Serbian people."
Serbian Prime Minister Vojislav Kostunica said his government had done all it could to track down the former Bosnian Serb army commander.
"Since the Serbian government has done everything in its power, I am convinced that it would have been better not to postpone the talks," he said.
He had pledged to deliver Mladic to the Hague tribunal.
Mladic, the former Bosnian Serb military chief, is charged with genocide over the 1995 Srebrenica massacre of about 8,000 Muslims and the siege of Sarajevo.
The EU enlargement commissioner, Olli Rehn, said he had spoken to Carla Del Ponte, chief prosecutor of the tribunal in The Hague, Netherlands, about Serbia's co-operation with the court.
"Her assessment was negative. It is disappointing that Belgrade has been unable to locate and detain Ratko Mladic," Rehn said.
"Serbia must show that nobody is above the law"
Ollie Rehn, EU commissioner
"The commission therefore has to call off the negotiations on the Stabilisation and Association Agreement."
Del Ponte later accused Serbia of misleading her.
"At the moment, there is no full cooperation. I was misled when I was told at the end of March that the arrest of Mladic was a matter of days or weeks."
Rule of law
The next round of talks, the first step towards eventual EU membership, had been due on May 11.
Rehn said they could resume if Serbia was certified to be co-operating fully with the tribunal.
"The issue is about the rule of law," he said. "Serbia must show that nobody is above the law ... The armed forces and security services must be fully under democratic control."
Vojislav Kostunica, Serbia's prime minister, had pledged to deliver Mladic to the Hague tribunal.
UN prosecutors say Mladic is hiding in Serbia with the help of military hardliners.
Serbia has denied knowledge of Mladic's whereabouts, although it recently admitted he had been under military protection until mid-2002 and received a pension from Belgrade until December.