Previously, the dairy was sending milk to a plant in the UK where it was turned into cheese.
The company said making the cheese on the island was “never an option” because it could not justify the cost of a plant.
It said: “Jersey Dairy was losing money on cheese and we had to make the decision to discontinue it.”
In a statement the company said the decision was made “some time ago” due to “ongoing issues with the cheese maker in the UK”, including around quality and the availability of production slots, plus “significant” increased costs.
“Jersey Dairy will not be looking to reintroduce it.”
John Garton, from Genuine Jersey, which promotes local products and producers, said the States – and shoppers – needed to support local producers to avoid losing more products moving forward.
Mr Garton said: “There’s some really good producers, but I think we’ve got to really nurture our growers and fisherman in order to have those producers make the products that we then want to buy.”