"The worst absolute moment was telling everybody I got dropped. Having to tell my family I got dropped," Mars said.
"I'm broke, I'm in debt. Walking into the room saying, 'yeah, I'm a signed Motown artist' and then walking into a room saying 'I'm a dropped Motown artist.'"
But the 31-year-old always knew he wanted to be in music "no matter what", so after being ditched by the label Mars kept trying his luck in LA.
There he was mentored by producer Steve Lindsey - with whom he secured a publishing deal in 2005 - and had his song Lost picked up by Epic Records, leading him to become a songwriter and pen hits for artists like Flo Rida, Travie McCoy, Adam Levine, Sean Kingston and Brandy.
He finally gained his own notoriety after featuring on and co-writing B.o.B's smash Nothin' on You and Travie McCoy's Billionaire, before going on to sell more than 100 million singles and albums worldwide.
Looking back, Mars said the hard times "sucked, but in a beautiful way".
"Because without that I might not be here. Without getting dropped, all of these things you have to go through, it ain't easy. If it was easy then everyone would be doing it."
Bruno Mars' new album 24K Magic is due to release on November 18.
To hear his full interview with Kiwi Zane Lowe, click here..