Headliners Queen announced on their website that the event - set to take place at Knebworth Park, Stevenage on the weekend of July 6 - will now not go ahead.
"It is with very heavy hearts and much regret that we announce the cancellation of Sonisphere Knebworth 2012," the statement on QueenOnline read.
Organisers are yet to confirm the news officially, while BBC's Newsbeat understands that an official confirmation will be released tomorrow.
American Idol's 2009 contestant and 'For Your Entertainment' singer Adam Lambert was due to headline the Saturday evening with Queen legends, guitarist Brian May and drummer Roger Taylor.
The Darkness, Kiss, Faith No More, Incubus, Marilyn Manson and comedian Tim Minchin were among the names also set to appear at the festival.
Watch the video for Queen's 'Friends Will Be Friends' below: