The annual music festival, which is held at the North Byron Parklands in Yelgun, NSW, was due to be staged from July 19 to 21.
Tickets went on sale on March 21, with Australian pop superstar Kylie Minogue among the artists set to perform.
The line up was announced on March 12 and also included artists Tash Sultana, Turnstile, Angie McMahon, G-Flip, Yeat, Arcade Fire, Thelma Plum, Future, Middle Kids, Girl in Red, The Dreggs and Baby Gravy.
Folk duo The Dreggs described the festival's cancellation as "a devastating hit to the Australian music industry" on Triple J's Instagram post announcing the news.
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DJ and songwriter Hayden James commented, "Love you Splendour", while Teen Jesus and the Jean Teasers - also on the line-up - posted three sad face emojis.
Triple J, a major sponsor of the event, confirmed on Wednesday the event was cancelled.
The festival is the latest to be cancelled after Groovin the Moo organisers were forced to ditch the event's 2024 tour in February due to insufficient ticket sales.
Organisers said sale figures were not sufficient "to deliver a regional festival of this kind", with Groovin meant to take artists to Bendigo, Wayville, Canberra, Bunbury, Newcastle and the Sunshine Coast from April to mid-May.
Phone numbers for Secret Sounds, the organiser of Splendour in the Grass, went unanswered on Wednesday but tickets were still available for purchase via Moshtix.
Falls Festival, also organised by Secret Sounds, was cancelled in 2023.
Live music industry advocates on Tuesday warned the NSW government that festivals could soon be a thing of the past without further investment.
An additional 112 venues in NSW are offering live music opportunities thanks to state government reforms, Premier Chris Minns says.
But more than 25 music festivals across Australia have been cancelled since 2022 - nine of them in NSW - according to data from the Australian Festival Association.
In NSW, music festival organisers face higher cost pressures due to extra regulations, Live Performance Australia chief Evelyn Richardson said.
Splendour in the Grass organisers had to apologise to patrons after the 2022 event when punters became stranded and bogged as the festival was held in extreme weather.
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