Warning labels were issued as a consequence of a clinical trial in which 6 of the 4,740 Exubera-treated patients developed lung cancer, as opposed to 1 of the 4,292 patients not treated with Exubera.
The move is the latest twist in the downwards spiral of Exubera, which appears to have taken the whole inhaled insulin market down with it.
Exubera launched as the world's first inhalable insulin and was touted as a potential $2bn a year blockbuster.
However, it was dogged by safety concerns, as well as complaints that the device was too expensive and cumbersome, leading to Pfizer abandoning the treatment.
This occurred last October, with Exubera having disappointing revenues of only $12m in the year prior to Pfizer pulling its support.
Since then their has been a retreat from the inhaled insulin market, with Novo Nordisk stopping development of its inhaler and Eli Lilly pulling out of its joint development of AIR Insulin with Alkermes.
Pfizer maintains that the evidence is insufficient to determine a link between developing lung cancer and using Exubera.
Joe Feczko, MD Pfizer's chief medical officer said: " Pfizer is vigilant in monitoring adverse drug reports for all its products, including Exubera, which has shown in clinical trials to be a safe and effective medicine in the treatment of adults with type 1 or type 2 diabetes ."
Even if Exubera was linked to the development of cancer no one knows if the problem is with inhaled insulin in general, just Pfizer's treatment or perhaps proteins delivered via inhalation.
These uncertainties have cast a shadow over the whole inhaled insulin market and there are those that believe that this development is the final nail in its coffin.
William Tanner, an analyst with Leerink Swann & Co in New York, responded to the news in a research report: " Concern over cancer will not be limited to Exubera solely.
We no longer think there will be a major market for inhaled insulin ."
In addition to those in the clinical trials there has been one post-marketing case of a patient using Exubera developing lung cancer.
All those who developed lung cancer had a prior history of smoking.
A concern for Pfizer and all those that have trialed inhaled insulin will be that damage to lung tissue may not be revealed for some time.
This raises the prospect of more cases coming out of the woodwork in the coming years.
This development saw the share price of Pfizer's developmental partner for Exubera, Nektar Therapeutics, fall by 25 per cent and ended its search for a new partner to continue the development of the treatment.
Exubera's failure has hit Nektar hard, with the 69 per cent of its revenue which came from Pfizer in 2007 being reduced to nothing this year.
The inhaled insulin market is now largely free of competitors for MannKind's Technosphere Insulin System which is currently advancing through Phase III trials.
However, the consensus appears to be that there is no longer a market to compete for.
Natixis Bleichroeder analyst Jon LeCroy agreed with the majority of analysts when predicting that this was the end of the inhaled insulin market and regarded the development " as an absolute disaster for MannKind ".