The free gay and lesbian event has been held every year since 1999 and has attracted up to 40,000 revellers.
Safer Wales, which helps organise the festival, said growing costs and increasing demands on the unpaid committee had led to the decision.
A spokesman said they hoped to bring the event back for 2009.
Mark Williams of Safer Wales said: "The Mardi Gras committee have given extensive personal time and effort without payment to ensure the event is considered to be one of the front runners in the UK gay pride event calendar.
"The high demands placed on committee members have made it difficult to retain volunteers and attract new ones.
"The committee have worked hard in recent years to raise funds and with growing costs for the event and infrastructure this has become increasingly difficult."
Difficulties
The Mardi Gras is usually held at the end of the summer and had been scheduled for 6 September this year.
Mr Williams said last year nearly all the entertainers performed for free, reflecting the financial difficulties the event faced.
In the past, celebrities such as Charlotte Church and Dr Who creator Russell T Davies have appeared at the festival.
Acting Chief Inspector Daryl Fahey, from South Wales Police minorities support unit, said the force had worked with the festival organisers for 10 years and added it was "disappointing" that the event would not be going ahead.
Courtesy of the BBC

