The company said it was shelving its proposal to develop a 690MW offshore wind farm off the coast of Islay, saying that while it would continue to work with stakeholders, it "will not be investing further in the project in the foreseeable future".
It will continue to support the development of its SeaGreen project for two wind farm areas in the Firth of Forth until it secures government consents for their construction.
SSE will also seek to reduce its 75% stake in the 750 MW Beatrice project off the coast of Caithness, which got the green light last week, to no more than 50%. Spanish oil and gas firm Repsol owns the remaining 25%.
The energy giant said it was taking the decision until it was sufficiently confident in the viability of the offshore wind sector.
Jim Smith, SSE's managing director for generation development, said there were two major, related hurdles that offshore wind projects had to overcome. One was a cap on how much can be levied in fuel bills, which he said meant there was "limited support" for offshore wind. He said the second was cost, with offshore wind farm development depending on a sustainable and lower cost supply chain.
Lindsay Leask, senior policy manager at industry body Scottish Renewables, said the news underlined the uncertainty developers had about the future of the offshore wind sector, and that strong support from the Scottish and UK Governments was key to the sector's future.