United have now switched their attentions to other targets ahead of Tuesday’s transfer window deadline at 6pm after pulling the plug on any deal to sign the Italian, 25, despite agreeing a fee with Watford.
Forestieri has also been linked with a move to Sheffield Wednesday.
Club owner Cellino said: “We decided on Tuesday that we would not be signing Forestieri, it was clear he didn’t have the right mentality needed to come to Leeds.
“I want players to show a hunger and desire to come here – but he did not. “It was not about the money. A player could cost £3million, £5m or be a free transfer, but if their mentality isn’t right, then I will not sign them for Leeds.
“Players like Wood, Adeyemi and Dallas are what we need here – they gave everything to show that they wanted to join Leeds.
“Look at Murphy, he showed a great commitment to the club.
“All our new signings showed that they really wanted to play for Leeds.
“We are building a team of players with the same attitude and the mentality needed to make Leeds successful again.
“Forestieri did not show that and we have moved on. We ended the deal on Tuesday and we are now looking at different players.”