The (unsurprising) news comes weeks after Phonak sacked Landis following his positive B sample for testosterone.
Team owner Andy Rihs told a news conference: "As a passionate cyclist, I am bitterly disappointed the sport of cycling apparently has become a synonym for doping. I truly regret this development and it has brought me to the decision of disbanding the Phonak team."
Landis denies any wrongdoing and is set to challenge a two-year ban from cycling's governing body, the International Cycling Union (UCI). Team manager John Lelangue commented: "What he does is up to him."
Rihs added: "Three weeks ago, we were the winners of the Tour de France, we were overjoyed, the sponsors were queuing up to join us, and then suddenly this blow."
"We looked for solutions, talked day and night and now I've made my decision, I'm pulling out," he said.
The Phonak team has not had a trouble-free past - Spain's Jose Enrique Gutierrez and Colombian Santiago Botero were both suspended in relation to alleged doping in Spain, and Oscar Camezind was banned in 2004 for taking the banned drug EPO.
iShares, a subsidiary of Barclays Bank, was set to take over as the team's title sponsor in 2007, but Rihs said the deal had been called off.