The music event, which was due to take place on 31 August on Weston-super-Mare beach, was set to feature more than 30 acts performing across three stages, as well as being broadcast live for three hours on ITV2 followed by a one-hour special on ITV.
It replaced the T4 on the Beach festival, which had a ten-year run prior to Channel 4's decision to wind up its T4 brand.
In a statement Done and Dusted said: "We are extremely disappointed to announce that this year’s event will now not go ahead. A number of contributing factors have led to the cancellation, not least being the tough economic climate resulting in poor ticket sales."
The company added that ticket holders would be fully refunded, and thanked North Somerset Council and others who had supported the event. Tickets went on sale for the event on 23 May.
The festival had secured such music performers as Professor Green, Gabrielle Aplin, Stooshe, The Strypes and stars from The Big Reunion including 5ive.
Done and Dusted would not comment on whether Summer Sets on the Beach would take place next year.
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