The event on the edge of the Simpson Desert in western Queensland usually attracts a crowd of about 10,000 people and the 2026 event was 90 per cent sold out, according to organisers.
It follows the collapse of Byron Bay Bluesfest earlier in March.
Big Red Bash organisers had been trying to relocate the festival after learning that water at the sand dune site where it is traditionally held would not dry out before the festival in July.
"The decision to cancel this year's event, whilst difficult, is based on what we believe is in the best interest of the event and patrons," said festival founder Greg Donovan.
The event is set to go ahead in 2027, with most of the musicians on the 2026 line-up agreeing to play at the outback festival next year.
Ticketholders have been told they can request a refund, transfer their tickets to the 2027 festival, or transfer to the Broken Hill Mundi Mundi Bash in August.
The 2026 program had featured Australian artists including Missy Higgins, Hoodoo Gurus, The Teskey Brothers, The Living End, Birds of Tokyo, Jessica Mauboy, Shannon Noll, Kate Ceberano, and The Whitlams.
Organisers had asked ticketholders how they felt about relocating the festival, with 95 per cent of them participating in a survey.
Cancelling an almost sold-out festival was an incredibly tough call, said Oztix managing director Stuart Field, who promised refunds would be processed efficiently.
"The way Greg and his team have engaged directly with patrons and made this decision in their best interest, is a testament to the integrity and reputation they've built over many years," Field said.
The Big Red Bash brings a $20 million spending boost to outback Queensland each year, according to organisers.
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