The owners of properties around St Andrew Square have demanded a clampdown on the use of its historic square for major events.
Despite one of the main outdoor arenas for festival events, firms like RBS and Standard Life want it to be a “space for relaxation” in August.
Insiders say the Fringe ban is linked to the arrival of a number of new restaurant chains on St Andrew Square and an ongoing development, by the Chris Stewart Group, to create luxury apartments.
It is thought the owners want to create a more “corporate” environment in the area, akin to Canary Wharf in London, and ensure there is no damage to the square from events.
However the Edinburgh Festival Fringe Society said it was "disappointed" at the stance due to the popularity of the St Andrew Square arena in recent years and said it was still hopeful of a rethink.
Promoters are struggling to find a new home for the Famous Spiegeltent, one of the Fringe’s most popular venues, after concerns were raised about the takeover of the garden, which dates back to 1770.
It was opened in 2008 following a Â£2.6 million makeover funded by Edinburgh City Council and Esssential Edinburgh. It is leased to the authority by the owners.
Crowds have flocked to see First Minister Nicola Sturgeon, Hollywood actor Brian Cox, singer Karine Polwart, actress Elaine C Smith and the musical Sunshine on Leith there.
The clampdown has been agreed by the council and business group Essential Edinburgh, which maintains and manages the garden, and the owners. It is also expected to affect the Edinburgh Jazz and Blues Festival, which is staged in the run-up to the Fringe.
A joint statement issued on behalf of the council, Essential Edinburgh and the owners said: “Everyone agrees that the garden is a superb green space in the heart of the city to be enjoyed by local people, visitors and those who work in the city centre all year round.
“It is a space for relaxation, as well as providing a pleasing interlude in the pedestrian journey through the city. Its importance as a pedestrian route linking the east and west of the city centre will grow as the new St James development comes out of the ground.”
Richard Lewis, the council's culture leader, said: “In all our discussions with key stakeholders, the owners have reinforced their belief that the square should be a place for quiet enjoyment all year round.
"Our aim has always been to strike a balance between the needs of the owners, locals and visitors, and festivals and events.
"We’re working closely with festival operators to agree the best locations for activities in this important 70th anniversary year.”
Kenny O’Brien, director of Salt ‘n’ Sauce Promotions, which has taken over the garden for the last three years, said he was “livid” at the approach taken by the owners.
He added: “We’ve been told that they don’t want anything happening in the square at all. I’ve not even been able to get in direct contact with any of the owners to speak to them about it.”
A spokeswoman for the Edinburgh Festival Fringe Society said: "The Edinburgh Festival Fringe is an extraordinary festival which brings considerable economic benefit to the city and is one of the major reasons Edinburgh is such a wonderful place to live, work and do business.
"St Andrew Square has been an important part of the Fringe offering for a number of years and has been well received by the public as well as by the businesses, traders and residents in and around the area.
"We are disappointed that St Andrew Square may no longer be available as a Fringe venue, particularly in the Fringe’s 70th anniversary year, but are still positive about reaching a resolution with the owners, for the benefit of the area, the Fringe and the city as a whole.
"We are also working with Essential Edinburgh, the city council and the venues to find an alternative solution should it be necessary.”