The supermarket will continue to stock other Kingsmill products, such as crumpets, waffles and pancakes.
According to the Grocer, Kingsmill owner Allied Bakeries will also keep supplying Tesco with Allinsen and Burgen bread.
The news comes at a difficult time for Allied Bakeries, with parent company Associated British Foods last month forecasting lower profits for the six months to 28 February.
The firm blamed the intensifying bread price war between the supermarkets.
Tesco, Morrisons, Asda and Sainsbury's have all cut bread prices in a bid to compete with cheaper rivals Aldi and Lidl, and are pushing for lower prices from suppliers.
Tesco's decision also comes just weeks after Allied Bakeries' chief executive, Mark Fairweather, stepped down, describing the UK bakery market as "intensely competitive".