"For us as the MDC, this is probably the darkest day of our lives, for the whole nation is waiting," he said.
A unity government is seen as the best chance of preventing total collapse in once-prosperous Zimbabwe, where prices double every day and more than 2,000 people have died in a cholera epidemic.
But a September power-sharing agreement has stalled amid fighting over who should control key ministries and regional leaders have failed to secure a compromise, despite international calls for stronger action.
Tsvangirai reiterated that the MDC was committed to the power-sharing deal but only if Mugabe ceded control of powerful ministries, such as home affairs, finance and information.
Al Jazeera's Haru Mutasa, reporting from Harare, said besides the allocation of ministries, other sticking points were the ceding of some of Mugabe's power to Tsvangirai and allegations by the MDC that the security forces controlled by Mugabe's ruling Zanu-PF had abducted or arrested opposition members without good reason.
The MDC said abductions of its members proved "beyond a shadow of a doubt" its rivals had not respected the spirit of the September pact.
Mugabe said talks had broken down but would continue, and blamed Tsvangirai's MDC for blocking proposals put forward by the Southern African Development Community (SADC) at the meeting.
Leaders from South Africa and Mozambique had tried to mediate in Monday's talks, but having failed once again to reach agreement, neighbouring countries now plan to hold another meeting in either Botswana or South Africa on Monday, which all Zimbabwean leaders have agreed to attend.
Zimbabwe's economic and humanitarian crisis has deepened during months of political stalemate and an aid group warned on Monday that hundreds of thousands of people could be at risk from a surge in cases of malaria, which can be deadly.
The United Nations-backed Roll Back Malaria Partnership said 1.63 million Zimbabweans were at increased risk of contracting malaria after usual prevention measures were neglected by health workers busy trying to contain a cholera epidemic.
Tsvangirai won a presidential election last March but by too few votes for an outright victory. He pulled out of the subsequent run-off, citing violence against MDC supporters, allowing Mugabe to win unopposed.
The two men subsequently struck the power-sharing deal in September after months of wrangling, but have failed to implement the deal.