They had expressed interest in Calgary Flames blueliner Jay Bouwmeester, but were unwilling to let go of the necessary assets required to acquire a top-four defenseman.
Colaiacovo, 29, is one of the few good options left on the scarce open market and had been targeted by the Wings since the beginning of July.
Red Wings GM Ken Holland had reportedly offered the veteran blueliner a one-year deal, but Colaiacovo was looking for a three-year contract. It is believed that both camps could have compromised on a two-year deal.
While Colaiacovo is not the caliber of Lidstrom or Stuart, he can quarterback the powerplay and is known to be a good skater. He has, however, struggled with injuries in the past, playing no more than 67 games in any season.
In 64 games with the St. Louis Blues last season, Colaiacovo posted two goals and 17 assists for 19 points.