The 23-year-old Hyderabadi had got engaged to 24-year-old Sohrab, who is from an influential business family, in July last year.
"We were friends for years but found ourselves incompatible as fiances. I wish Sohrab the very best in life," Sania said in a brief statement without elaborating the exact reasons for the break up.
Sania's father Imran Mirza said the two families, who have been friends for years, continue to be on good terms despite the couple's split.
"The two families have known each other for over half a century. Despite the engagement not working out, the friendship continues," he said.
Sohrab is currently studying business in the United Kingdom.
The engagement marks yet another low in Sania's year so far as she has been battling poor form on the tennis court too.
The Indian crashed out of the season's first Grand Slam the Australian Open just a few days ago and didn't have any good results to talk of in the run-up to the big event.
Sania's engagement to Sohrab had triggered speculation about her injury-ravaged career and she also later stated that she would quit tennis after marriage.
Sania, the most successful woman player to take to tennis court, has had mixed fortunes after a breakthrough year in 2005.
She ranked inside top-30 on the WTA charts, a first for Indian woman and went on win the Australian Open mixed doubles title last year with Mahesh Bhupathi.
Apart from making waves on court, Sania also created furores off court, landing in controversies that ranged from fatwas against her tennis attire to her comments on pre-marital sex.
Her engagement on July 10 at a glittering function in a five-star hotel in Hyderabad was attended by about 300 guests, including 200 from Sania's side.
The guest list had included badminton player P Gopichand, Minister of State for Human Resource D. Purandareswari, her husband and legislator D. Venkateshawara Rao, Telugu film actor Vishnu and industrialist GVK Reddy of the GVK Group.
Sania will leave for Kuala Lumpur tomorrow for the Fed Cup Asia Oceania Group 2 competition.
Sania has to fight out of it: Father Imran
The broken engagement may affect Sania Mirza's tennis career, according to her father Imran who hoped that his daughter will overcome the emotional setback.
Imran said that Sania's tennis career had nothing to do with the "mutual" decision of calling off the engagement with her childhood friend Sohrab Mirza. "It has been mutual. Everything has happened in a very nice manner because both the families are so close to each other," Imran told reporters here.
"She will continue playing. It has nothing to do with her career. She had been playing before, played through the engagement and will continue to play," he said.
Asked if the break-up could hamper her career, he said, "Of course, it could. But she has to fight out of it. It would hurt Sohrab and he too has to come out of it."
On reports about some recent showdown between Sania and Sohrab, Imran pleaded ignorance.
"I know about the compatibility, don't know the details myself," he said. Imran also said that both the families will continue to share the cordial relationship. "Families are still very close," he said.