Alan Gow's transfer from Rangers to Wolves is off after the winger failed a medical.
Rangers agreed an undisclosed fee with the Championship leaders earlier this week before Gow headed to Molineux for talks.
The 26-year-old accepted Wolves' terms and had been looking forward to playing for Mick McCarthy's side.
However, the deal was subject to a medical and Gow has now failed to prove his fitness.
McCarthy confirmed: "Alan has gone back to Rangers.
"We'd agreed everything with him but something has shown up in the medical which we are not completely happy about.
"It's nothing serious, it's something bio-mechanical but that's something for Alan and Rangers to sort out, not us.
"He's a good player who would have added to the squad but that's not going to happen. In a way this is a credit to our medical team and how thorough they are.
"There's still plenty of time left in January and hopefully we will strengthen.
"We have a squad of players who have been doing well but of course we will continue to try and bolster the squad."
McCarthy, who also tried to sign Gow 18 months ago, ruled out resurrecting the deal before the transfer window closes.
He said: "I don't know what will happen in the future but it's not going to happen in this window."
The talented attacker spent the first half of the season on loan with Blackpool and had caught McCarthy's eye with a series of impressive displays.
Gow joined Rangers from Falkirk in 2007 after previous spells with Clydebank and Airdrie.