Groups including the Islamic Defenders Front (FPI) had threatened violence if the singer went ahead with her 'Born This Way Ball' Jakarta show, claiming that her revealing outfits and provocative dance moves would corrupt the country's youth.
> Lady GaGa on Indonesia tour date controversy: 'I will perform alone'
Police initially revoked the concert's permit due to safety issues, but later offered to grant the required permits if GaGa toned her show down.
However, her management insisted that there would be no compromise to satisfy religious conservatives, according to The AP.
"Lady GaGa's management has considered the situation minute to minute, and with threats if the concert goes ahead, Lady GaGa's side is calling off the concert," Minola Sebayang, lawyer for promoters Big Daddy said.
"This is not only about Lady GaGa's security, but extends to those who will be watching her."
GaGa herself wrote on Twitter: "There is nothing Holy about hatred. We had to cancel the concert in Indonesia. I'm so very sorry to the fans & just as devastated as you if not more.
"You are everything to me. I will try to put together something special for you. My love for Indonesia has only grown. #GagaSendsLoveToJakarta and all its people."
Big Daddy president director Michael Rusli added: "For the past few days we have communicated with the government and Lady GaGa's side. The government has given support, but this is not about the permit. The cancellation is really due to concerns over security."
Jakarta would have been the biggest stop on GaGa's Asian tour. All 52,000 tickets will be refunded.
FPI Jakarta chairman Habib Salim Alatas told AFP: "FPI is grateful that she has decided not to come. Indonesians will be protected from sin brought about by this Mother Monster, the destroyer of morals.
"Lady GaGa fans, stop complaining. Repent and stop worshipping the devil. Do you want your lives taken away by God as infidels?"
Beyoncé and The Pussycat Dolls have had to tone down their Indonesian performances in the past.
The secular country is the world's largest Islamic-majority nation, with 90% of its 240 million people practicing the faith.