The Boomtown Rats were to headline the event in Dumfries along with Rick Astley, ABC, The Stars from The Commitments and The Rezillos on 4 June.
Last year the Doonhamers hosted their first concert when Status Quo were the headline act.
However, advanced ticket sales of just 700 compared with 5,000 sold in 2015 prompted the decision to cancel.
Organisers said sales were "not sufficient to justify the event going ahead on a commercial basis".
"We have not been helped with the number of alternative outdoor festivals and concerts across Scotland and the north of England," they said.
"After weighing up additional costs to go ahead with the concert from this point against the costs of cancelling altogether it was unfortunately a decision that had to be taken.
"Clearly all customers who have already bought and paid for tickets for the event will be refunded in full."

The presidential poll will take place next month and Uhuru Kenyatta is seeking re-election.
On Friday, after a case brought by the opposition, the High Court ordered the electoral commission not to print ballot papers.
Mr Kenyatta insisted the election would go ahead as planned.
"This kind of intimidation will not be allowed and the election date will not change," he said.
He said the judiciary could not claim independence and then use it to interfere with the functioning of the executive and other arms of government.
The High Court argued that the tendering process for the ballot papers had not been transparent enough.
The opposition National Super Alliance (Nasa) alleged that the president had links to Al Ghurair, the Dubai-based firm that won the $24m (Â£18m) tender.
Al Ghurair and Mr Kenyatta deny any wrongdoing.
The judges ruled that the company could still print ballots for the parliamentary and county elections, but the tender for presidential ballots should be re-advertised.
Local media have reported that whoever takes on the job of printing and distributing the ballot papers will have just 30 days to do what is usually a 45-day task.
In a separate development, Raila Odinga, Mr Kenyatta's main contender, was taken ill and admitted to hospital on Sunday with what his campaign team said was suspected food poisoning.
Mr Odinga, speaking shortly after he was discharged from the hospital in the coastal city of Mombasa, said that he was "fit as a fiddle".
"I had stomach pains, which have since disappeared after getting treatment," Mr Odinga said, adding: "I have been discharged to go to Nairobi to continue with my campaigns."
Meanwhile, several people have reportedly been killed in clashes between rival political groups, rekindling memories of post-election violence in 2007-2008 that left more than 1,000 people dead.

Demonstrators marched outside the Iranian embassy accusing Tehran of interfering in Afghanistan's affairs.
Soaring fuel prices have angered many Afghans at a time of high demand during winter.
Afghan officials say 2,500 fuel tankers are stranded at the border. Iran denies blocking fuel exports to Afghanistan.
It is thought the Iranian government fears the fuel could be used by foreign forces, but Afghan officials say these concerns are unfounded.
Earlier this week Iran's ambassador in Kabul, Fadahoseyn Malaki, dismissed reports that Iran had barred fuel exports to Afghanistan.
"We give fuel to the Afghan nation," he told a news conference, although he added his government still had concerns which "should be addressed".
Friday's demonstration was led by Afghan MP Najib Kabuli, who has organised similar protests against Iran in the past.
A 1980s-themed concert at Queen of the South's Palmerston Park has been cancelled due to poor ticket sales.
[NEXT_CONCEPT]
Kenya's president has warned the country's judiciary not to help the opposition throw the next election into disarray.
[NEXT_CONCEPT]
Hundreds of protesters in Kabul have accused Iran of stopping fuel tankers from crossing the border into Afghanistan.