Reading Carnival's licence has been revoked due to police concerns about violence.
Thames Valley Police asked for a review after a teenager was stabbed at last year's event.
The council said it had no other option as there wasn't sufficient security and traffic plans in place.
The authority has encouraged the Reading Community Carnival Group - which organises the event - to submit a fresh application for celebrations in May next year.
In a statement, Reading Borough Council said, "Following consideration of representation from all parties, the Council's licensing subcommittee decided to revoke the current licence for Reading Community Carnival in order to enable a rebirth of the event.
"The Committee said it had no option but to revoke the current licence as there were not sufficient plans in place - including details on security, risk assessments or traffic regulation plans - for it to properly consider whether the event could be run safely or in accordance with the licensing objectives.
"The sub committee was clear however that it strongly encouraged a fresh application by the Reading Community Carnival Group (RCCG) as soon as possible for an event in May 2021, which sets out the detail of how the event would move forward, and in good time for it to be considered by all responsible authorities. The committee added it was imperative any event must comply with the licensing objectives, including the prevention of crime and disorder, public nuisance and public safety."
The Borough Council has vowed to work with Reading Carnival organisers so that the town can enjoy a popular, family-friendly event in 2021