"The contract we've offered to our musicians represents the limits of what we can do as responsible stewards of the long-term financial stability of the orchestra," said the DSO management in a statement.
Musicians rejected the proposed contract in which they would receive raises for seasons two and three but not the first.
"Their final offer was unacceptable to us," the Detroit Free Press reported New York attorney and the union's chief negotiator, Leonard Leibowitz, as saying.
"[It is] the worst (offer) we've ever seen," said Joe Goldman, chair of the Musicians' Negotiating Committee, in a statement.
"While we remain willing to work with the union, we cannot agree to terms which further threaten [the orchestra's long-term financial stability] and are not realistically affordable in this economy," the orchestra's management said.
The musicians accepted salary cuts in 2004 to assist the orchestra with its $2.2 million deficit, and were given compensatory raises in the subsequent season; the orchestra has since posted balanced budgets every year.
The DSO in its own statement said it depends on donors for most of its revenue and that it faces "unprecedented challenges" in preserving current conditions, given Detroit's struggling economy.
The majority of the orchestra's 98 musicians earn over the starting salary of $98,800, which places them at No. 10 in the American Federation of Musicians rankings; they are also concerned with income parity.
The current contract ends on September 2 and no more discussions are scheduled. DSO's season begins on September 13.