In a decision that shocked the entertainment industry and comedy world, CBS said on Thursday that it was canceling the most-watched show in late night, “The Late Show With Stephen Colbert,” and ending a franchise that has existed for more than three decades.

Mr. Colbert’s run — and “The Late Show” itself — will end in May after his contract expires.

CBS executives said in a statement that the cancellation was “purely a financial decision against a challenging backdrop in late night.”

“It is not related in any way to the show’s performance, content or other matters happening at Paramount,” said the executives, who included George Cheeks, the president of CBS and a co-chief executive of Paramount, CBS’s parent. “Our admiration, affection and respect for the talents of Stephen Colbert and his incredible team made this agonizing decision even more difficult.”

Paramount is in the midst of closing a multibillion-dollar merger with the movie studio Skydance, a deal that requires approval from the Trump administration. Paramount recently agreed to pay President Trump $16 million to settle a lawsuit over an interview on “60 Minutes,” a move Mr. Colbert criticized on his show as “a big fat bribe.” The merger still requires the approval of the Federal Communications Commission.

Mr. Colbert said during the taping of “The Late Show” on Thursday that he was informed of the decision on Wednesday night. When his studio audience unleashed a chorus of boos upon hearing the news, Mr. Colbert said, “Yeah, I share your feelings.”

He then praised the network, saying CBS executives “have been great partners.”

“I’m so grateful to the Tiffany Network for giving me this chair and this beautiful theater to call home,” said Mr. Colbert, who tapes the show at the historic Ed Sullivan Theater on Broadway.

The show’s abrupt cancellation is the latest in a series of profound changes to the world of late-night television. The genre has been struggling as the majority of the country migrates in droves to streaming entertainment and away from traditional broadcast and cable television. Last month, streaming overtook broadcast and cable as the leading distribution method for video entertainment for the first time.

The number of late-night shows has dwindled in recent years. So much so that earlier in the week the Emmys awarded only three nominations for best talk show because of a lack of submissions. Six years ago, the category had double the number of nominees.

The genre has also experienced a sharp decline in advertising revenue in recent years. In 2018, network late-night shows took in $439 million in ad revenue, according to Guideline, an advertising data firm. By last year, that figure had dropped to $220 million, a 50 percent drop in just seven years.

The cancellation of “The Late Show” raised immediate questions, though, about whether it was tied to the government’s review of Paramount’s merger with Skydance or the recent settlement with Mr. Trump. Mr. Colbert, who has hosted show for a decade, has been a passionate critic of Mr. Trump.

Senator Adam B. Schiff, Democrat of California, who was a guest on Mr. Colbert’s show on Thursday, said on social media after the show’s taping: “If Paramount and CBS ended ‘The Late Show’ for political reasons, the public deserves to know.”

Likewise, Senator Elizabeth Warren, Democrat of Massachusetts, said in a statement: “CBS canceled Colbert’s show just three days after Colbert called out CBS owner Paramount for its $16 million settlement with Trump — a deal that looks like bribery. America deserves to know if his show was canceled for political reasons.”

Mr. Colbert took over “The Late Show” in 2015, after David Letterman had founded it in 1993 in the 11:30 p.m. slot to compete with NBC’s longtime franchise, “The Tonight Show.”

It took some time for Mr. Colbert to find his sea legs as a network late-night host. A veteran of “The Daily Show” and “The Colbert Report,” both on Comedy Central, he struggled mightily in the ratings for well over a year, alarming CBS executives.

Mr. Colbert then became laser-focused on topical news, and he was increasingly pointed in his criticism of Mr. Trump — who had been one of his early guests in 2015 — as he swept into the White House. His ratings picked up steam quickly, and “The Late Show” overtook “The Tonight Show Starring Jimmy Fallon” in early 2017. The show remained in first place for the next eight years.

But ever since the pandemic, viewership for late-night topical shows has been falling.

The late-night hosts like Trevor Noah and James Corden voluntarily announced their departures in 2022, both saying they wanted to explore career opportunities beyond sitting behind a desk and telling jokes every night. That suggested to many in the entertainment industry that the days when comedians strove for a host’s chair — and held on to it for the rest of their career — was beginning to end.

In March, when the host of CBS’s 12:30 show, Taylor Tomlinson, announced that she was departing “After Midnight,” the network canceled the show and said it was no longer reserving the time slot for an original comedic talk show. Other late-night shows — including ones hosted by Samantha Bee and Conan O’Brien — that went off the air in recent years were also never replaced.

Topical streaming talk shows have struggled as well, providing yet further evidence to entertainment executives that a genre viewers have known for decades — with an opening monologue, celebrity guests, a band, a sidekick — could soon be a thing of the past.

“Let me tell you, it is a fantastic job,” Mr. Colbert said on “The Late Show” on Thursday night. “I wish somebody else was getting it.”

Some time later, Mr. Colbert left the Ed Sullivan Theater, accompanied by a dog, and stepped into a waiting car. He did not answer any questions from reporters standing nearby.

Hannah Ziegler contributed reporting.