Michael O'Neill is set to continue as manager of Northern Ireland after turning down the Scotland job.
The 48-year-old was believed to be close to taking over as Scotland boss following talks last week with the Scottish Football Association.
The SFA had agreed to meet a £500,000 compensation payment to the Irish FA in order to secure the services of O'Neill, who had described talks between the parties as "productive."
However, after a period of deliberation, O'Neill, who lives in Edinburgh, has decided against taking the post to succeed Gordon Strachan, and will instead remain in charge of Northern Ireland following their failed World Cup qualification campaign.
"Having given the matter a great deal of thought and consideration, I have decided not to take up the opportunity to become the next Scotland national team manager," said O'Neill.
"It is a huge honour to be offered the position. However, I do not feel that this is the right opportunity for me at this moment in my career.
"I would like to place on record my gratitude to the SFA for the very professional manner in which they conducted negotiations and I would also like to wish them every success for the future."
Strachan said he was not surprised O'Neill turned down the chance to become his Scotland successor, telling TalkSport: "In a way, no. When I met Michael, first of all when I starting coaching him at Coventry, he always asked questions, was always willing to take information, but at the end of the day he was his own man.
"There was a lot to be thinking about, a lot to be done - he lives in Scotland and he could have been swayed -- but he has had a look at it and for whatever reason, I don't know, he has decided to stay with a group of people that he has worked very well with for the last five years.
"Sometimes you get so long to think, there is so many things come into your thinking and you think well, it seems like a good idea at a time, but the longer you have to think of it you think maybe it is not such a good idea."
Meanwhile, SFA chief executive Stewart Regan insists Scotland's next manager will be given "ample time" to prepare for his competitive debut after being rebuffed by O'Neill.
"The board of the Scottish FA appointed a sub-committee to oversee the recruitment process, compile a list of suitable candidates and ultimately make a recommendation," said Regan in a statement.
"As part of that process, and in recognition of his work in taking Northern Ireland to UEFA Euro 2016, Michael O'Neill was identified as an obvious candidate for consideration.
"To that end, we requested permission to speak to Michael from the Irish Football Association, which was accepted. Michael and his advisers met our delegation in Edinburgh on Thursday and discussed all aspects of the role during a three-hour meeting.
"While this was a positive and cordial discussion, we respect Michael's decision to remain loyal to Northern Ireland, with whom he has enjoyed great success.
"We wish him well in his future endeavours and thank the Irish FA for their professionalism throughout.
"We now continue our recruitment process from the candidate list established by the selection committee, with a view to giving the new national coach ample time to prepare the squad for the UEFA Nations League."
Regan publicly ruled out SFA performance director Malky Mackay hours before he took interim charge of a friendly defeat by the Netherlands in November.