The Brazilian president, Dilma Rousseff, has called off a state visit to the US in October after the US spied on her personal communications and those of other Brazilians.
Rousseff's decision came on Tuesday despite a 20-minute telephone call from her US counterpart, Barack Obama, on Monday night in an attempt to salvage the trip.
In a statement, Rousseff's office said: "The two presidents decided to postpone the state visit since the outcome of this visit should not be conditioned on an issue which for Brazil has not been satisfactorily resolved.
"The illegal interceptions of communications and data of citizens, companies and members of the Brazilian government represents a serious act which violates national sovereignty and is incompatible with democratic coexistence between friendly countries."
The White House and Rousseff's office both said a state visit could take place at a later date.
Jay Carney, White House spokesman, said an eventual state visit "should not be overshadowed by a single bilateral issue, no matter how important or challenging the issue may be".
Relations were hit after the National Security Agency snooped on emails, text messages and calls between the Brazilian president and her aides, as well as the Brazilian state oil giant Petrobras.
The revelations came from documents leaked by Edward Snowden, a US intelligence contractor, and prompted a political uproar in Brazil.
US officials said the spying was aimed at tracking suspected terrorist activity and did not pry into personal communications. Rousseff was not convinced, and said she would act to protect her country.
The trip was expected to be a platform for deals on oil exploration and biofuels technology, and Brazil's potential $4bn purchase of 36 F-18 fighter jets from Boeing.