"We'll never know how many people who waited, who thought about buying tickets, and who wanted to experience what should have been the summer's most magical happening," organizers said in a statement.
"There will be no festival."
This year's festival, scheduled for June 25th to 29th, featured a lineup that included UK synth-rockers Depeche Mode and the Pet Shop Boys, as well as Swedish darlings First Aid Kit and Håkan Hellström.
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But organizers decided to pull the plug on what would have been the 14th installment Peace & Love when an expected boost in ticket sales failed to materialize this week following the weekend when Swedes receive their monthly paychecks.
Since 2007, the festival, which had grown to a perennial stable of Sweden's summer festival music scene, had sold an average of 23,000 tickets during May and June.
"But with 9,000 tickets sold, we are far short of our goal," organizers explained.
"We're unable to pay our operating costs and the closer the festival comes, the harder it gets to reorganize and cancel."
Organizer Jesper Heed apologized to music fans who had planned to make the journey to Borlänge in central Sweden.
"We are all extremely sorry and obviously feel extra badly for those of you who have looked forward to, planned, and bought tickets," Heed said in a statement.
While organizers hoped Peace & Love's spirit of "optimism and belief in the future" would continue, they refused to outline any specific plans to revive the festival in the future.
The festival isn't the first Swedish music festival to run into difficult financial straits.
In 2010, the Hultsfred festival filed for bankruptcy, only to return a year later after reorganizing.