Breakout was due to take place on the town’s Esplanade across three days, starting on Friday, May 27.
But the organisers said tonight that poor ticket sales meant they had no alternative but to call it off.
The line-up included a number of long-established Scottish bands and performers, including Hue and Cry, The Skids, Big Country, Goodbye Mr McKenzie and Midge Ure – as well as a number of talented Fife based singer-songwriters.
Also on the bill were the Red Hot Chili Pipers and Sandi Thom.
Breakout was due to be held in The Basin at the end of the Esplanade last autumn, but put back to this summer because of COVID restrictions, and had hoped to attract up to 30,000 people over the three days.
But with just one week to go, the organisers reached the decision to scrap it.
In a brief statement, they said: “The current economic climate has led to a level of ticket sales that makes live events unviable.”
Ian Arnott, who has spent over 18 months working behind the scenes on Breakout, said: ”The whole team is absolutely gutted.”
Preparatory work was due to start on the festival site on Monday with fencing arriving followed by the staging and all the tech gear – and the organisers said they couldn’t gamble on a last minute ticket rush to cover costs.
Breakout would have been the single biggest music festival staged in Kirkcaldy – and the biggest in Fife this summer.
It originally envisaged two stages with the Showmen’s Guild bringing some of their Links Market rides back to town for the event.
That was scaled back to one main stage, and, earlier this month, Scottish legends Wet Wet Wet departed from the line-up.
Added Ian: We can’t thank everyone enough who stuck with us right to the very last second.
"Had we gone ahead and tickets hadn’t picked up a lot of people would have been let down and w couldn’t do that.
“Our supporters have been superb.
"They have all put in so much hard work to try to make this happen.”