The 18-year-old was stabbed to death during an unprovoked racist attack in 1993, and only two of at least five men suspected of involvement have been jailed for murder.
Allegations of corruption, incompetence and discrimination in the original investigation sparked a damning report finding institutional racism in the Metropolitan Police.
On Thursday, it announced that “all identified lines of enquiry have been completed” and no prosecutions can currently be brought against remaining suspects.
Baroness Lawrence, Stephen’s mother, said: “I am truly disappointed that those others who were equally responsible for my son's racist killing may not be brought to justice.
"I am very sad that a line has now been drawn into the investigation and that it is now in an 'inactive' phase.
"Despite this, I would still urge anyone who has any information that could help me get all of Stephen's killers convicted, to come forward.
"It is never too late to give a mother justice for the murder of her son. Whilst the Metropolitan Police have given up, I never will."
Stephen’s father, Neville Lawrence, said he was disappointed but not surprised that the investigation had apparently reached its end.
He added: "Over the last few years I have had to come to terms with the reality that some of the killers of Stephen may never be brought to justice for what they did.
“With the announcement today that the investigation has become inactive, I am conscious that the case can never be closed for me.
"I will always live with the hope that someone might come forward with evidence which will allow us to achieve full justice for Stephen - by bringing about the prosecution of the others responsible for his murder."
Two of the killers, Gary Dobson and David Norris, were jailed for murder in 2012.
Two of the three remaining suspects, brothers Neil and Jamie Acourt, have since served jail time for drug dealing, while Luke Knight has remained free.
Dame Cressida Dick said she was “sad” at the outcome of the investigation and praised the “tireless campaigning for justice” by Stephen’s parents.
“Profound changes have happened in policing, the law and wider society. I pay tribute to them for their courage and achievements,” the Metropolitan Police commissioner added.
“We were able to secure two convictions following a determined investigation in 2012 but it is well known that other suspects were also involved in the events which unfolded that night and it is deeply frustrating that we have been unable to bring them to justice.”
Dame Cressida said that any new information that comes to light will be considered and the investigation will be periodically reviewed for new investigative opportunities.
On 22 April 1993 Stephen had been waiting for a bus with his friend, Duwayne Brooks, on Well Hall Road in Eltham, southeast London.
Mr Brooks saw a group of white youths moving towards them and said he heard one call Stephen a “n*****” before they started a brutal attack.
He was forced to the ground and stabbed, managing to run more than 100 metres before collapsing and dying of his injuries.
The initial Metropolitan Police investigation identified five suspects who were arrested - Dobson, the Acourt brothers, Knight and Norris.
Acourt and Knight were charged with murder but the prosecution was discontinued in court, then a 1994 private prosecution brought by Stephen’s family against all five suspects failed.
They attended a 1997 inquest into his death but did not answer questions, and in the same year an investigation by the then Police Complaints Authority revealed there were weaknesses and lost opportunities in the original investigation, including inexplicable delays in arresting suspects.
Jack straw ordered a public inquiry by a former High Court judge, Sir William Macpherson, which found the Metropolitan Police to be institutionally racist in 1999 and made 70 recommendations.
The report and legacy of Stephen’s death has come into renewed focus following international Black Lives Matter protests sparked by the police killing of a black man in the US.
Parliament’s Home Affairs Committee is currently conducting an inquiry examining what has changed in the 21 years since the Macpherson report was released.
Additional reporting by PA