The venue would have had a 21,500 capacity and be situated across from the railway station, close by other concert venues which locals said would have disrupted their lives.
Mayor Khan cited concerns around light pollution, electricity bill and a lack of “green credentials” when explaining his decision.
A spokesperson for the mayor said: “London is open to investment from around the world and Sadiq wants to see more world-class, ambitious, innovative entertainment venues in our city.
“But as part of looking at the planning application for the MSG Sphere, the Mayor has seen independent evidence that shows the current proposals would result in an unacceptable negative impact on local residents.”
Some residents told The Independent they had vowed to leave if the sphere was built, while others said it would be good for local business. The construction was expected to be covered in animated adverts lit up by LED panels for the next 25 years.
Over 1,000 residents opposed the plans to build The Sphere in their local area saying it would have significantly disrupted their lives.
It was estimated to cost a significant £800 million with supporters suggesting it would add billions to the London economy.
The Sphere, which was designed by architect Populous, cost $2 billion to build in the Las Vegas desert where U2 played in October to widespread critical acclaim.
Yet critics complained that the desert was very different to the crowded metropolis of the city of London where West Ham’s football stadium, concert venues, train stations and tube stations were all within a relatively small radius.
A spokesperson for MSG told The Independent in October, that the project would bring 2,200 jobs to Stratford, adding an estimated $2billion to the London economy and $50 million in annual revenue for local residents.
Newham, the London borough that includes Stratford, is one of the most deprived in the country, with 36 per cent of its residents living in poverty
They said at the time: “We are fully committed to bringing Sphere to London and delivering its many cultural and economic benefits, including creating thousands of jobs and generating billions of pounds for the local, London and UK economy.”
However, a Sphere Entertainment spokesperson lashed out at the Mayor’s latest decision and said on Monday: “While we are disappointed in London’s decision, there are many forward-thinking cities that are eager to bring this technology to their communities. We will concentrate on those.”
The final decision now rests with the Communities Secretary Michael Gove for a final ruling.
Mr Gove had temporarily halted progress on the building which had temporarily halted both the London Legacy Development Corporation (LLDC) and the Mayor of London from signing off on proposals.