Benfica ditch Chelsea deal for Luiz
"We have not reached a deal with Chelsea and at the moment the negotiation process is closed," Benfica said in a statement.
The Portuguese champions had confirmed on Thursday that they had received an offer from Chelsea for the centre back, and that talks were ongoing.
Portuguese media reports said the announcement of a deal reached at a meeting in London on Saturday had been delayed due to differences over payment instalments.
Luiz, 23, has a contract with Benfica that runs until 2015 and is one of the most promising defenders in Europe.
He arrived in Lisbon from Brazil in 2007 and was a key member of the Benfica side that last season clinched the Portuguese Premier League title for the first time in five years, missing only one of 30 league matches.
His performances earned him a call-up to the Brazil squad for a friendly against the United States in August. He also played against Iran and Ukraine in October and is in the squad for the February 9 friendly in France.