The X Factor judge said the boys had the top time and should move on.
Walsh told Heat magazine: "They're like Blue - yesterday's men. There's too much competition for them."
He added: "You have to have something amazing as there's so much talent out there: JLS, One Direction, Westlife, The Wanted."
Louis added that things changed following the death of band member Stephen Gately in 2009.
He said: "Boyzone can carry on, but it wasn't working.
"It was great while it lasted, but it's time for me to move on."
Meanwhile, band member Shane Lynch said: "No, Boyzone are not splitting up.
"That's just Louis being his usual self. It's all news to us.
"He's been saying that he's been leaving since 1993. I wouldn't listen to any of those rumours."