News of the cancellation first broke last night when headline band Queen revealed that the festival at Knebworth Park, Stevenage would not go ahead.
Organisers have now confirmed the news with a full statement on the festival's official website.
"It is with very heavy hearts and much regret that we announce the cancellation of Sonisphere Knebworth 2012," the message read.
"Putting the festival together in what is proving to be a very challenging year was more difficult than we anticipated and we have spent the last few months fighting hard to keep Sonisphere in the calendar.
"Unfortunately circumstances have dictated that we would be unable to run the festival to a standard that both the artists and that Sonisphere's audience would rightly expect."
Organisers expressed their "deepest regrets" to artists, staff, suppliers, contractors and fans and said that ticketholders would be able to claim full refunds from their ticket agents.
Kiss and Faith No More were due to headline the event alongside Queen and Adam Lambert.
Other artists confirmed for the July festival had included Incubus, Evanescence, The Darkness, Marilyn Manson, Cypress Hill, Andrew WK and comedian Tim Minchin.
Watch the Queen and Adam Lambert in interview below: