The judge on The Great British Bake Off is also facing backlash over his alleged affair with Mexican-born co-host Marcela Valladolid.
Divorced mum-of-one Marcela, the US version of Mary Berry, and Paul are said to have "hit it off from day one" with Tequila brand owner Marcella describing him as a "handsome devil" and the pair frequently sharing pictures of themselves on Twitter.
A production source said: "It's over. It's been cancelled," according to The Mail on Sunday.
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"We've all been waiting for CBS to tell us if they were going to pick us up for a second series and this week the call came in saying it's not being renewed and we should take alternative employment offers.
"Critics hated it and the ratings were abysmal. None of us are particularly surprised, to be honest."
The cancellation of the American version of the hit show Great British Bake Off – which got only got 5.8 million viewers at its peak – is reportedly down to Paul's lack of a strong character.
"He has not made an impression like Gordon Ramsay or Simon Cowell did in their first shows," said a source.
The bad news comes after Paul, 47, has seen his marriage to wife Alexandra Hollywood break down.
Alexandra, who was married to the celebrity baker for 15 years, filed for divorce from him on the grounds of his adultery.
Paul, who rose to fame after his pastry and bread recipes hit the small screen in 2010, has not denied Alexandra's claims and has admitted that he is responsible for their marriage breaking down.
"It's my fault. I am very sad about what has happened," he said, "I do feel very sad about it and what it brought on the family."
News of Paul and Alexandra's separation broke in May and just days after The Great British Bake Off star turned up at the TV Baftas without his wife, his agent confirmed the news.