According to sources, Mourinho had a conversation with current Man United manager Ruben Amorim, which led him to change his mind about pursuing a deal for the 25-year-old.
As a result, Sancho is now considering other options, with two Serie A teams - Napoli and Juventus - showing interest in signing him.
Negotiations with Juventus are reportedly at an advanced stage, with United accepting a £21 million offer for the player's personal details.