The official, who declined to be identified because he is not authorised to comment on the search effort, said two weeks of scouring the Indian Ocean floor with a U.S. Navy submersible drone had turned up nothing.
He said the search for the jetliner, which vanished on March 8 with 239 people on board, would now enter a much harder phase of scouring broader areas of the ocean near where the plane is believed to have crashed.
"We went all in on this small area and didn't find anything. Now you've got to go back to the big area," the official told Reuters.
"And now you're talking years."
The undersea drone Bluefin-21 is expected on Friday to finish what may be the last of its 16-hour trips to depths of more than 4.5km (2.8 miles), searching a 10 square km (6.2 square mile) patch of seabed about 3,200 km (2,000 miles) northwest of the Australian city of Perth.
Australian search officials said that despite it having completed 95 percent of its target search are, the remote controlled submarine had failed to turn up any sign of the plane.
Authorities had identified the area as their strongest lead in determining the plane's final resting place after detecting what they suspected was a signal, or "ping", from the plane's black box recorder on April 4.
Although the most promising efforts have been focused underwater, the air and surface search continued on Friday with up to eight military aircraft and 10 ships working on visual searches of an area of about 49,000 square km (19,000 square miles).
But the U.S. official said Malaysia would now have to decide how to proceed, including whether to bring in more underwater drones, even with the understanding that the search could continue for years without a refined search area.
"It would have been nice to find it, but it would have been like on the first play of the game throwing an 80 yard bomb for a touchdown, and that just doesn't happen an awful lot," the official said.
FAMILIES INCREASINGLY FRUSTRATED
Malaysia has been under growing international pressure to improve its disclosure about its investigation into the disappearance of the plane, which was on a night flight from Kuala Lumpur to Beijing when it vanished.
Prime Minister Najib Razak told CNN on Thursday that his government would make public a preliminary report into the plane's disappearance next week.
The network did not specify which parties Malaysia intended to give the report to or what information was expected to be contained in it.
Underscoring frustration at the lack of progress, several dozen family members of Chinese passengers on board gathered outside the Malaysian embassy in Beijing in the early hours of Friday, prompting a heavy police presence.
"Whenever we ask questions, the airline people tell us it is the responsibility of the government, the investigation, the search and everything are taken charge of by the government, so they cannot answer any questions," Steve Wang, a spokesman for the families, told reporters.
"In this way, the government just avoids their duties."
Chinese foreign ministry spokesman Qin Gang repeated that the Malaysian government should "actively respond to the reasonable demands and legal rights" of the families.
"At the same time, we hope the passengers' families can express their demands legally and through rational means," Qin told a daily news briefing.
Despite the seemingly discouraging news on Friday, no one involved in the search effort would publicly discuss the possibility of calling and end to the operations.
Australian Navy Chief Ray Griggs, speaking to reporters in Hong Kong, said there were still options available for moving forward.
"If the rest of the search doesn't find anything initially, there might be a further search in the same area with different equipment," he said.
"But that's something the three governments need to work at," he said, referring to Malaysia, China and Australia.