The company stated that it could not afford to chase expensive long-term prospects in Peru after an eight-year long effort to produce oil in the South American country, Reuters reported.
“We haven't been able to generate a substantial production potential in the blocks we control in Peru, despite our discovery in Block 64," spokeswoman Veronica Bonifaz told the news agency.
"After reviewing our global portfolio we've decided to focus on near-term liquid hydrocarbons."
Talisman currently operates blocks 64 and 103, and has non-operated interests in blocks 123 and 129 in Peru.
Talisman said it would work with government regulator Perupetro on the transition of its holdings as it wraps up commercial transactions prior to its exit from the country.
Indigenous rights group Amazon Watch welcomed the news, claiming the Canadian company had come under increasing pressure by human rights groups and shareholders for operating without Achuar consent.
"Talisman has had to face up to what the Achuar told them when they first invested in Block 64: The company cannot drill without the consent of the Achuar people," said Peru program coordinator at Amazon Watch, Gregor MacLennan.
"Talisman's exit sends a clear message to the oil industry: Trampling indigenous rights in the rush to exploit marginal oil reserves in the Amazon rainforest is not an option."
However, Bonifaz told Reuters that Talisman's decision had nothing to do with opposition from indigenous groups.
"We don't operate in the territory of communities that oppose our activities, we only work in places where we have the support of communities," she said.