Organisers say people who have already bought tickets for Beverley Folk Festival will not get a refund, as the company which runs it is now in the hands of insolvency practitioners.
The festival was due to be held at Beverley Racecourse over the weekend of June 15 to 17.
Over 80 acts were scheduled including headliners Gretchen Peters and Turin Brakes.
Tickets had been on sale for £130 for the weekend with camping or £110 for the weekend without camping. Headline shows cost up to £25.
In a statement the directors offered their "deepest and most sincere" apologies to those owed money.
They added: "It is with immense sadness and regret that we have to announce that this year’s festival cannot go ahead.
"Beverley Folk Festival is a non-profit-making organisation, run by a dedicated team of volunteers. Unfortunately we have recently discovered that we have lost our primary source of funding so we simply do not have the money to pay for either the infrastructure or the performers.
"We know that there will be a lot of people who are as disappointed as we are but we hope you will understand that, under the circumstances in which we find ourselves, it is not possible to run the event."
They said the company had been placed into a creditors’ voluntary liquidation, adding: "Unfortunately the company is unable to refund those people who have bought tickets in advance of the festival.
"The directors, who are also volunteers, have taken the steps to place the company into a creditors’ voluntary liquidation as the company is insolvent.
"The directors have instructed a firm of licensed insolvency practitioners to assist them with this process and if you are owed money or have bought a ticket in advance then they will be in touch with you shortly."
Those who have paid by credit or debit card may be able to get a refund from the card issuer.
The directors thanked those who have supported Beverley Folk Festival over the years "especially the sponsors, funders, East Riding of Yorkshire Council, Beverley Town Council and the hundreds of wonderful volunteers and artists."
It said the company had ceased to trade with immediate effect and any voicemail / messages would not be read or dealt with.
Their corporate recovery licensed insolvency practitioners are Redman Nichols Butler, The Chapel, Bridge Street, Driffield, East Yorkshire, YO25 5DA Tel: 01377 257788