The school's headmaster said the "growing expense and luxury" forced on parents was also a major concern.
Beaulieu Convent School in Jersey also referred to "worries about alcohol and drug consumption" at the end of Year 11 event for pupils aged 15-16.
A former pupil said the prom was an important milestone and accused the school of overreacting.
Chris Beirne, headmaster, said the "significant focus and distraction" caused by the prom "does not fit into the ethos of our school".
Writing to parents Mr Beirne cited a letter from an unnamed colleague who was convinced the preparations and the event were "not positive, constructive or healthy experiences".
The colleague wrote: "The financial strain and the inevitable competition associated with this is another very unwelcome, and sometimes crushing, aspect for many parents."
The letter from the colleague also referred to "alcohol and drug consumption at after-parties" as "a considerable concern".
It said the strain of trying "to be slim, fashionable, have perfect skin" led to "unacceptable pressure".
Mr Beirne said he could no longer "safely manage the risk" associated with the event.
The independent Catholic school said it would continue to offer Year 13 leavers a celebratory mass with their families followed by a drinks reception at the school.
The Â£5,400-a-year convent has around 760 students aged 4-18.
Former pupil Hannah Hosegood, 20, said her prom was "a first taste of maturity" and the school should tackle individual pupils if they had concerns about drugs or alcohol.
She said: "It's really upsetting knowing those girls won't be able to experience an event you spend a fair amount of time looking forward to and remember for the rest of your life."

The Posh lost for the third successive time since their cup defeat when they were beaten 2-1 at home by Oldham.
"They're falling short of the standards that they're capable of, and they have done since the FA Cup tie.
"I've got to believe that there's some sort of hangover going on," Westley told BBC Radio Cambridgeshire.
"A young group of lads have built themselves up almost into a frenzy to go and play and win a massive game in their minds, they've got so close, they've given so much, perhaps physically and mentally it drained them."
Tuesday's defeat kept Peterborough 12th in League One, eight points off the play-off places.
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"I've tried to deal with it game-by-game through selection and through talking to them as people, but we haven't snapped ourselves out of this apparent malaise," added 47-year-old Westley.
"On a motivational level we're not tracking back runners, we're not showing enough discipline to play the way we're coaching them to play, we're not showing enough belief in our game, we're slow, we're lacking urgency, there are so many things missing,
"But I don't think they're bad people, I don't think they're downing tools and not producing the goods because they can't be bothered, I just think they've lost their way."

The station, based in Toxteth, was set up as part of a government initiative three years ago and has been supported by money from the BBC licence fee.
Another operator, Made TV, provided further support, but the BBC understands the station has struggled.
Bay TV's chief executive said he hoped it would be sold as a going concern.
Chris Johnson added he was optimistic the channel would continue.
Peter Harold, of Skelmersdale-based adminstrators Refresh Recovery, said a meeting with the station's 20 staff had been held.
He said more than one buyer was interested in taking over the business, "but we have a few more hoops to jump through first".
Bay TV, which was awarded a licence in February 2013, continues to broadcast and can be viewed on Freeview and Virgin.
In addition to news, sport and music, the station also covers arts, culture and religion.
A girls' school has scrapped its end of year prom claiming it is too much of a "distraction" to pupils.
[NEXT_CONCEPT]
Peterborough United are still suffering from their FA Cup penalty shootout loss to West Bromwich Albion, according to manager Graham Westley.
[NEXT_CONCEPT]
The owners of Bay TV, Liverpool's local television station, have insisted it will survive despite going into administration.