The Top Gun star's company, Cruise/Wagner Productions, worked with the studio for 14 years, jointly producing blockbusters such as War of the Worlds, Minority Report and the Mission: Impossible movies.
On Tuesday, the chairman of Viacom--Paramount's parent company--Sumner Redstone announced the deal was not being renewed.
Redstone told the Wall Street Journal, "His recent conduct has not been acceptable to Paramount.
"As much as we like him personally, we thought it was wrong to renew his deal."
Cruise received a barrage of negative publicity last year due to his public displays of affection with fiancée Katie Holmes, his promotion of his controversial religion Scientology and his verbal bashing of actress Brooke Shields for her "misguided" use of prescription drugs to treat her postpartum depression.
"It's not really the most businesslike approach. We've had virtually no dealings with Mr. Redstone.
Cruise's agent Rick Nicita adds, "What this says about Paramount is self-evident. It was graceless and it was shocking and offensive."
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