Hobart City Council will come up with a 12-month transition plan after deciding to offload the Taste Festival in a near-unanimous vote.
The upcoming Christmas-New Years event has also been cancelled due to pandemic uncertainty and financial constraints.
More state government involvement is likely in the Taste which generates nearly $50 million in economic activity around the state.
“If the festival was to go ahead this year, it would not be able to meet the high expectations of our community, sponsors, visitors and stakeholders and that could damage the long-term sustainability of the event,” said Lord Mayor Anna Reynolds.
“The Taste of Tasmania’s reputation is too important to risk. Instead, this forced hiatus has given us an opportunity to stop, take stock of what has been successfully built over many years, and take the necessary steps towards a more sustainable future for the festival.”
At Monday night's meeting Deputy Lord Mayor Helen Burnet paid tribute to stallholders and others who've made the event what it is.
"We've had some amazing festival directors over the years, and staff who've worked really hard making this the best event that our city can provide," said Cr Burnet.
"It's been a phenomenal 30 years."
Alderman Jeff Briscoe said the decision wasn't an easy one.
"It has been the principal festival for summer for Tasmania and Hobart for so many years now, and I know a lot of people from interstate - and when we used to get international visitors, they used to come to the Taste as well," he said.
"It is a sad, sad day for Hobart."