The Great British Rhythm and Blues Festival has been cancelled by Colne Town Council due to rising costs.
Council chair, Liberal Democrat Mary Thomas, said the council "no longer has the resources" to run the festival after taking over its administration in 2017.
"It has become clear over the three years that Colne Town Council has run the festival that it has become unsustainable in its current form.
"Ticket sales for the main stages have been falling year on year. In addition, the buyers... have overwhelmingly been from an older demographic and we have been unable to attract a younger audience in enough numbers."
The town council expects to stage a new summer music festival from next year.
Awarded UK Blues Festival of the Year 2019, the event is estimated to have attracted 25,000 people to the Lancashire town that year. It has been an annual event for the past 30 years.
A petition calling for the decision to be overturned has received more than 5,000 signatures online.