Saliba, 19, was signed by Arsenal for a reported £27million (€29.7m) last year before being loaned back to the Ligue 1 club for the 2019-20 season.
The centre-back was seemingly expected to have a role in the Arsenal first-team squad in 2020-21, though it now appears another loan spell with Les Verts was on the cards.
Or it was until – according to Saint-Etienne – administrative delays on Arsenal's end caused the deal to fall through on deadline day.
A club statement released on Tuesday read: "Long before the transfer window closed, Saint-Etienne had reached an agreement with William Saliba and accepted Arsenal's offer for a one-season loan.
"Unfortunately, all the administrative conditions could not be met in time, in England, for the finalization of the deal.
"The disappointment is great for Saint-Etienne and William Saliba, [who was] particularly determined to return to the club where he had flourished."
The two clubs were at odds last season as well, when they failed to find a loan extension agreement that would have allowed Saliba to play in the Coupe de France final in July.