UB40 featuring Ali Campbell, Sister Sledge and the Ministry of Sound Disco were due to headline the event at Leighton Hall near Carnforth between June 3-5.
The event was taking place to coincide with the Queen’s Platinum Jubilee.
Organisers of Highest Point festival in Lancaster, who were also organising Leighton Live, put out a statement on Facebook saying: “It is with great sadness that we have made the decision to cancel this year’s Leighton Live three day music Festival.
“We often see people produce all sorts of reasons why they cancel events, but we do not wish to stray from the truth – with two weeks to go, the whole project just isn’t going to work.
“Events are ridiculously expensive things to stage, with the ever increasing costs required to put each one on covered not only by the ticket sales but by the bars and on-site catering too.
“It has taken us the past four years to get Highest Point Festival to the point where it breaks even and has a secure future, and continuing with Leighton Live would heavily jeopardise that.
“We have spent the last week or so working through various forecasts and scenarios, but ultimately, we have to make the decision to cancel the event rather than incur any more expenses in delivering the show.
“We would like to say a big thank you to everyone who supported us along the way, in believing in the event and what it could have been, especially Lucy and all the team at Leighton Hall for giving us this opportunity.
“For those that have purchased tickets, refunds will be issued automatically in the next few days.”
A spokesman for Leighton Hall said: “It is with great sadness that the team from Highest Point Lancaster who are bringing the Leighton Live Festival to us have made the decision to cancel this event.
"The reason for this decision is that with two weeks to go, we simply have not sold enough tickets.
"All tickets holders will receive a full refund shortly.”