Description:The animal was seen near Earl Hall Drive in St Osyth, near Clacton-on-Sea, by holidaymaker Bob Martin at about 19:00 BST on Sunday.
Mr Martin said he and his wife Denise saw a large cat and a lion "was the first thing that came to mind".
Police officers decided to call off the search on Monday after no trace of a big cat was found.
A police spokesman said: "We believe what was seen on Sunday evening was either a large domestic cat or a wildcat.
"Extensive searches have been carried out, areas examined and witnesses spoken to - yet nothing has been found to suggest that a lion was in the area.
"The reporting of the animal is not being treated as a hoax, but should such information come to light we will have no hesitation in making arrests."
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From the scene
image of Gareth George Gareth George Reporter, BBC Look East
Rumours circulated that pawprints found in a field were being checked out by police, but most locals remained doubtful.
As she dead-headed her roses, St Oysth resident Anne Robinson seemed unconcerned at reports a lion could be on the loose.
"We've got quite a high garden fence," she said. "It would have a job jumping over that."
The media hoping to shine a spotlight on the lion became an attraction itself. As TV reporters went live with the latest news, passing cars beeped their horns and some passengers made a fake roar.
The holidaymakers who spotted the mystery beast remain convinced they had seen a lion. But experts at Colchester Zoo were not convinced and in the end, neither was Essex Police.
But whether it exists or not, the St Oysth lion looks set to become part of Essex folklore.
Essex Police said about 25 officers were called to where the animal was seen, including specialist firearms officers and experts from Colchester Zoo.
Two police helicopters, one with thermal imaging equipment, were also used to try to detect any trace of an animal.
Police said all the animals at nearby Colchester Zoo had been accounted for.
A member of the public took a low quality photograph of the animal, but experts at the zoo said a definite identification of the animal was not possible based on the image.
Anthony Tropeano, Zoological Director of Colchester Zoo who visited the scene, said: "The photograph shows an animal in a field, it is a sandy brown colour, but the photography is of such poor quality it's not possible for us to say one way or the other what it definitely is.
Farmland in St Osyth The animal was seen in fields near Earls Hall Farm
"There were absolutely no sightings of it during the time I was there. Nothing really to provide any further evidence to suggest it had been there."
On Sunday night police had advised residents to stay indoors, but on Monday they said people should "go out and enjoy themselves" but "be a bit cautious".
The spokesman said a circus had been in the area, at Clacton Airfield, recently but added: "Officers have spoken to the circus and confirmed that they do not have an animal missing, nor do they have any lions."
Denise and Bob Martin, who reported the sighting to the police, told the BBC: "To start with, we were convinced it was a lion... it's the size of a lion."
Mr Martin's sister-in-law took several photos of the animal, which Mrs Martin described as having a "white chest, with a tan, beige-colour body".(2:37)