The company said the decision followed a switch in strategy, which will see it use agencies on a project basis.
The Timberland chief operating officer, Ken Pucker, said in a statement: "We have made a strategic decision to move away from a retainer-based relationship with our advertising agency."
The decision comes just two-and-a-half years after the brand decided to centralise its advertising into one network.
The Publicis-owned Fallon won the business, then worth $20 million, following a two-way international pitch against J. Walter Thompson.
Black Rocket/Euro RSCG in San Francisco and Interpublic Group's Carmichael Lynch in Minneapolis, in conjunction with London's cdp-travisully, also competed in the pitch.
The review was overseen by former Coca-Cola and Procter & Gamble marketer Frank Bifulco, who was hired by Timberland as the chief marketing officer.
However, Bifulco left Timberland early last year to join Hasbro.
Over the past two years, Fallon London shared worldwide creative responsibility with its sister New York agency. The London shop was responsible for the European work for the brand.
No-one at Fallon was available to comment on the split as Campaign went to press.