Morison, 67, said he and Thai journalist Chutima Sidasathian, 34, have decided to move on from the publication and it will close on January 1 if no buyer can be found.
"We stayed on after the Royal Thai Navy sued us to fight for media freedom and for the stateless Rohingya boatpeople," Morison said.
"But those important issues are now much more widely understood. The bit-players are starting over," he said.
In a case with far-reaching implications for media freedom in Thailand a court last week ruled that Morison and Chutima had no intention to damage Thailand's reputation in a story published in Phuketwan in 2013.
Judges said the information they published came from Reuters, a reliable news organisation, and was not their own.
Morison, a former senior editor of The Age, has been spending his life's savings publishing the Phuketwan site, which has led coverage of the plight of Rohingya Muslims from Myanmar, who have been described by the United Nations as among the world's most persecuted people.
He said he and Chutima intended to continue to cover the refugee saga and corruption in Thailand but for broader audiences.
As well as the plight of Rohingya, Phuketwan has reported extensively on issues affecting tourists on the Thai resort island of Phuket.
Morison founded the site in early 2008. It is edited by Morison with four Thai staff and attracts between 4000 and 8000 viewers on normal days but draws huge numbers when big news breaks.
Morison said the defamation proceedings that dragged on for almost two years were a huge financial and personal burden.
The Thai navy has not said whether it will appeal last week's verdict, which was welcomed by human rights and journalist advocates.