Royal Air Maroc announced on Friday that Air Senegal (ASI) had stopped operating and cancelled all flights.
"This is the inevitable consequence of the situation created by the Senegalese side," RAM said in a statement released on Friday.
"For several weeks Royal Air Maroc has warned its Senegalese co-shareholders that there was a risk Air Senegal would stop its activities."
History of disagreements
The Moroccan airline first invested in ASI in 2000, but the relationship had deteriorated in recent years.
RAM criticised Senegal for the country's decision in 2007 to take majority control of the airline after Senegal accused RAM of bad management.
The relationship took a turn for the worse When a Senegalese court ruling banned RAM from withdrawing from the Senegalese carrier earlier this month.
RAM has also said that Senegal owes the company about 4 million euros.
Senegal, on the other hand, has accused RAM of blocking an audit of the firm ordered by a court in Dakar earlier this month.
"Royal Air Maroc's planned disengagement should allow the Senegalese State to realise its wish to take control of its national company in the best of conditions," RAM said.