Alexander Rossi said it proved "impossible" to compete with the government-fuelled Indonesian Rio Haryanto for the final seat on the 2016 grid.
The Californian was a major contender for the place alongside Pascal Wehrlein at Manor, but GP2 driver Haryanto ultimately sealed the deal when his state-owned sponsor Pertamina lodged a EUR 5 million downpayment this week.
And Indonesian media sources say the newly Mercedes-powered team has been promised about $15 million from the Haryanto camp across the remainder of 2016.
"We’ve brought Rio to F1," his manager Piers Hunnisett is quoted by the Jakarta Post. "We’re going to see the first Melbourne race, and see what’s going to happen in the first half of the season.
"I’m sure a lot of Indonesian companies will (notice) Rio and hopefully more of them will come and join us in sponsoring him," he added.
Rossi, 24, was also offering Manor a significant sponsorship purse, but it was not enough to be competitive alongside Haryanto and his backers.
"I always knew going up against a country was going to be impossible," he said in an online report initially published by Racer that was subsequently modified.
Among the quotes deleted from the report was Rossi’s claim that, amid the apparent "auction" for the Manor seat, Haryanto’s sponsors went away and "doubled his offer".
Rossi is believed to now be in talks for a switch to Indycar, but is refusing to give up on his F1 dream for 2017.
"Coming out of 2015 I was very confident, and it’s disappointing, but it’s not over yet," he said. "We’re in discussions with Manor for the future and that relationship is still very strong and very positive."