The vaccination approach is viewed by the medical community as one of the brightest hopes of stopping the HIV/AIDS epidemic and would work by virus infecting people.
Merck's V520 was one of the most advanced vaccines in development.
According to the United Nations, more than 25m HIV sufferers are known to have died from AIDS related diseases since its identification in 1981.
There are currently over 40m people living with the disease worldwide, with over two thirds of these in sub-Saharan Africa where food, let alone medication, is scarce.
The V520 (MRKAd5gag/pol/nef) vaccine contained three different components each derived from a weakened version of the common adenovirus type 5 virus (Ad5) and modified to contain one of three synthetically produced HIV genes gag, pol and nef.
These genes are predominantly found in HIV subtype B and the trial focussed on sites in North and South America, the Caribbean and Australia where this subtype is among the most common.
The hope was that the adenovirus virus vector would cause a cell-mediated immune response that would stimulate the body's CD8 T-cells to recognise and destroy HIV infected cells.
Unfortunately, the multi-centre STEP (HVTN 502, Merck V520 Protocol 023) trial showed that the virus did not prevent infection by the virus or reduce the amount of virus in those who became infected.
"Developing an effective AIDS vaccine remains one of the most challenging tasks facing modern medicine," said Dr Peter Kim, president of Merck research Laboratories. One of the major problems associated with developing an HIV vaccine is the virus' ability to mutate, with many vaccines falling foul of its ability to mutate.
Speaking at the Adventures in Virology and Cancer Symposium for Robin Weiss last Friday, Professor John Moore, of Cornell University in New York, US, said that the diversity of HIV in a single individual after 6 years of infection is as great as the global diversity of influenza since 1996.
This high mutagenicity of the virus has hampered many of the previous attempts to develop HIV vaccines.
Many of these focussed on the HIV envelope that assists the virus' entry into cells, which is highly variable and easily mutates to evade antibody binding.
The STEP trial was conducted on a 3,000 HIV-negative volunteers, aged between 18 and 45 years old that were at a high risk of HIV infection and was a novel 'test of concept' trial.
"This trial was the first test of concept trial that provided us information on this vaccine more quickly and efficiently than with a traditional Phase III design," said Dr Larry Corey, principal investigator of the HIV Vaccine Trials Network that ran the trials.
"While we are very disappointed that this vaccine candidate did not demonstrate protection, the data from this trial will provide critical insights into this disease and future vaccine development."
Sanofi-Aventis' ALVAC-HIV (vCP 1521) is currently being studied in a Phase III trial in Thailand.
The company has said it will not release any data from the trial until 2009.
The vCP 1521 vaccine is a recombinant canarypox virus (CNPV) that also contains gag and pro gene insertions as well as an HIV subtype E gp120 insertion which is boosted with VaxGen technology.