Aberdeen have announced that McInnes and No.2 Tony Doherty will stay, in an embarrassing blow to the Wearsiders.
Sunderland were granted permission to talk to McInnes on Wednesday after £1million compensation was agreed.
But like David Moyes, who quit the role, the ex-Bristol City boss discovered he would have no funds for rebuilding.
Sunderland will renew their search on Friday having also missed out on Garry Monk, who chose Boro.
Their next appointment will now know he was second choice and be left grappling with a financial crisis that hasn’t eased with the £30million sale of Jordan Pickford.
An £83million wage bill and £138million of debts need to be slashed as part of a long-term rebuild.
The Black Cats issued a statement on their website following McIness’ sub.
“We have been in discussions with a number of potential manager candidates over recent weeks,” said CEO Martin Bain. “In the last few days we have been negotiating with Aberdeen Football Club in order to allow us to speak with Derek McInnes. Having held initial discussions, both ourselves and Derek have decided not to progress with further talks and we will continue with our recruitment process”.