The "eco-friendly" Outsider Festival - due to be held in Aviemore at the end of June - has been cancelled as a result of the economic downturn, organisers have revealed.
The event, planned for the end of June, was to be headlined by Texas frontwoman Sharleen Spiteri and had received almost £100,000 in public funding.
But it is thought fewer than 2,000 tickets for the 5,000-capacity site in the Rothiemurcus Forest had been bought by this week.
Ticket holders have been promised full refunds, including booking fees.
The news is a major blow to Scotland's festival scene. Earlier this year it was revealed that a host of big-name artists are struggling to sell tickets for outdoor shows, while tickets for normally sold-out events such as T in the Park are still available.
In a statement, organisers said: "Due to the unremitting economic downturn and audience numbers now projected, we feel that we cannot produce an event that provides a festival experience at the level that is expected and deserved.
"Clearly a recession is not the time to realise this bold new concept but we still believe the Outsider was right for its time and are hugely disappointed that it is not going ahead."