Organisers pulled the plug just a month before the Sir Ben Kingsley backed three-day event was due to take place.
Richard Ashcroft and Billy Bragg were among the acts confirmed for the festival, which was to be held between May 27 and 29 at Redcliffe Farm.
A statement on its website said: “After much consideration, it is with great sadness that we have to announce we can’t put Scarborough Fair Festival on this year. The organisers have been left with no choice but to call off the three day camping festival due to logistical issues.
“After 18 months of hard work, the last 18 days have been the hardest.
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“As tough a decision as this has been for the organising team, we feel it’s only fair to pull the event several weeks before, rather than get into a situation where we let more people down nearer the time.
“All ticket holders will receive a face value refund.
“Once again, you have our apologies - and our immense gratitude for your support.”
Tickets were priced at up to £100 for the inaugural event.
Scarborough Fair Festival was the brainchild of promoter Joel Levack.
When he launched the event he said: “In 1998 I put on a mini-festival on a friend’s family farm for my 18th birthday.
“Since then I’ve wanted to bring a boutique festival to Yorkshire which marries art, through its very own art gallery, and great music like nowhere else. Eighteen years later we’re going to do just that and put Scarborough on the festival map.” It was due to have five stages of music playing everything from electric pop to folk, with Everything Everything and Lianne La Havas also set to perform.