Poor ticket sales are blamed for the cancellation of the Faenol Festival - called off for the second time in as many years.
The decision was announced by a "disappointed" opera star Bryn Terfel, who has backed the event near Bangor, Gwynedd.
Last month the event was offered nearly £250,000 of assembly government money.
The festival - which planned Westlife as its headline act - was first held in 2000 on the Faenol Estate.
Faenol Festival Trust chairman Sir David Henshaw said it was too soon to say if the event, also cancelled last year, would return.
Last month Terfel revealed that ticket sales were down for the festival, which was due to be the 10th.
At that time he said staging a festival in the current economic climate was "a challenge".
He has now said: "Unfortunately, advance ticket sales in this challenging economic climate have not been sufficient for us to feel confident that we can move ahead with the full festival.
"All I can say is that we have looked at the situation in great detail and from every possible angle. We have found no other workable solution."
In July, it was announced the festival was to be given nearly £250,000 of assembly government money over a three-year period.
The decision, by Deputy First Minister Ieuan Wyn Jones, came days after the Arts Council of Wales cut grants to several arts organisations.
The move prompted Conservative Leader Nick Bourne and Liberal Democrat Eleanor Burnham, an honorary president of the Llangollen International Eisteddfod, to question the fairness of the funding.
The Welsh Assembly Government said it was disappointed, but pointed out that its funding was always subject to the festival going ahead.
Meanwhile, Terfel thanked festival goers who responded to his July appeal to support the festival by buying their tickets early, and also those who had supported the event since it began.
"By continuing with the Westlife element, we hope that we will be able to provide some of our valued audience with the entertainment promised and also provide the locality with some much needed business."
Gwynedd council leader Dyfed Edwards said the council would seek an early meeting with the event organisers to discuss its long-term future.
The Faenol's Westlife performance will now go ahead on 27 August in the arena at Venue Cymru in Llandudno in Conwy county.
All tickets for the Westlife concert at the Faenol Estate will be automatically valid for the show at Venue Cymru. Those with seated tickets who wish to attend will be refunded the balance.