Zynga, the developer behind previous megahits like FarmVille and CityVille, has seen its shares fall 13 per cent following the announcement.
When the current agreement expires, on March 31, 2013, Zynga players will no longer be able to share their progress on Facebook, while Zynga itself won't be able to promote its games on Facebook or display Facebook branding on its own site.
Despite having its own games platform, the news is a bad blow for the company which, at it's peak, attracted 82 million players a month.
Last month, Zynga announced job cuts and studio closures in an effort to save costs. The message from Facebook is that this move brings Zynga in line with other game developers using the social network.
"We will continue to work with Zynga, just as we do with developers of all sizes," Facebook said in a statement.
However, according to the BBC, research suggests 80 per cent of Zynga's revenue comes from Facebook users.