The announcement was made by Socialist party legislator Jorge Rodriguez, who heads the government's negotiating team. Rodriguez said the Venezuelan government would not attend the talks set to begin on Sunday.
The Venezuelan government in September named Saab - who was arrested in June 2020 when his plane stopped in Cape Verde to refuel - as a member of its negotiating team in talks with the opposition in Mexico, where the two sides are looking to solve their political crisis.
Rodriguez, reading from a statement, called the decision to suspend negotiations "an expression of our deepest protest against the brutal aggression against the person and the investiture of our delegate Alex Saab Moran."
Opposition leader Juan Guaido condemned the decision.
"With this irresponsible suspension of their assistance in Mexico, they evade once again urgent attention for the country, which currently suffers from extreme poverty of 76.6 percent," he said on Twitter. Guaido said he would continue to insist on finding a solution to the country's crisis.
Venezuela, in a Twitter post by the Ministry of Communications, denounced the extradition as a "kidnapping."
Hours after Saab's extradition, Venezuela revoked the house arrest of six former executives of refiner Citgo, a US subsidiary of state oil company PDVSA, two sources with knowledge of the situation and a family member told Reuters.
The US Justice Department charged Saab in 2019 in connection with a bribery scheme to take advantage of Venezuela's state-controlled exchange rate. The US also sanctioned him for allegedly orchestrating a corruption network that allowed Saab and Venezuelan President Nicolas Maduro to profit from a state-run food subsidy program.
Saab's lawyers have called the U.S. charges "politically motivated."
Cape Verde national radio reported the extradition on Saturday. The government of Cape Verde was not immediately available to comment.
The US Justice Department did not immediately respond to a request for comment.
In a Twitter post, Colombian President Ivan Duque called Saab's extradition "a triumph in the fight against drug trafficking, money laundering and corruption by the dictatorship of Nicolas Maduro."
The former Citgo executives, who were arrested in November 2017 after being summoned to a meeting at PDVSA headquarters in Caracas, were taken from their homes to one of the headquarters of the intelligence police, two sources said on Saturday.
The six former executives had been released from jail and put on house arrest in April. read more
The group is made up of five naturalized US citizens and one permanent resident. The US government has repeatedly demanded their release.
"My father cannot be used as a bargaining chip," said Cristina Vadell, daughter of former executive Tomeu Vadell. "I'm worried for his health, even more given the country's coronavirus cases.
The Ministry of Communications and the Attorney General's office did not immediately respond to requests for comment.