The English-born back, who is equally at home in the 15 shirt or on the wing, has seen a number of injury setbacks disrupt his career and Northampton have now decided that he is not fit enough to cope with the demands of English rugby.
"We monitored Cameron's condition between signing his contract and his scheduled arrival and after great consideration felt that on balance we needed more certainty about his ability to handle the tough demands of our long season for the duration of his three-year contract," said Northampton's director of rugby Jim Mallinder.
"With a minimum of 32 games in Aviva Premiership rugby, the Heineken Cup and LV= Cup, our campaign is the most demanding in the world.
"We know Cameron has ability and are confident that he will be with another club soon. But while we are disappointed that Cameron will not be joining us we are nevertheless very confident in the ability of our squad to compete in every competition this coming season."
Shepherd will now turn his attentions to finding another employer, with a new contract in Australia seemingly more likely than an alternative European adventure given the imminent nature of the northern hemisphere season.
At just 28 years old, Shepherd could still have plenty of time left at the top of the game if he can prove that his medical problems are not as serious as Northampton think and it would be unlikely if he is not offered an opportunity to resurrect his career somewhere else.
And although he faces a massive battle to add to his nine international caps, a new deal with either the Brumbies, Force, Rebels, Reds or Waratahs could see him take on the Lions next summer as Britain and Ireland's elite are due to face all five Australian franchises.