The DC Comics film, which was filmed entirely in Glasgow and had been set to feature Hollywood stars Michael Keaton, Brendan Fraser, JK Simmons and Leslie Grace, was axed after receiving poor reviews in test screenings, according to US publication The New York Post.
However, Warner Bros has cited "leadership's strategic shift" for the decision.
Production cost an estimated $70 million (£57.6m) and the film was scheduled for release late this year.
But following test screenings, Batgirl will no longer appear in theatres or on streaming service HBO Max.
Glasgow City Council had agreed to give Warner Bros £150,000 in the form of a ‘filming incentive grant’ to shoot the entire production in the city.
However, council leader Susan Aitken stressed in the wake of the decision to axe the film that “no public money has been paid to Warner Bros”.
She posted on Twitter: "[It’s] obviously disappointing Hollywood corporate shifts mean we won’t get to see Glasgow on the big screen in Batgirl. The new Indiana Jones will have to suffice. Some important points though – the production created well over 1000 local jobs for crew, tradespeople and extras.
"No public money has been paid to Warner Bros, but the city did make direct income from the production in eg parking charges. Wider economic benefits to local supply chain and other businesses like hospitality aren’t fully quantified yet, but they were very significant.”
Glasgow earned a record £42.2m from the film industry after cast and crew from multiple Hollywood blockbuster movies descended on its streets last year.
The figure is the highest sum generated for the city’s economy from the film and broadcast sector to date, according to the Glasgow City Council’s (GCC) film commission, the Glasgow Film Office.
Ms Aitken said: “To be clear, the filming location of Batgirl has *nothing* to do with it being pulled! Glasgow still got all the benefits of the production, other movies will still be made and filmmakers will still come to Glasgow – not least because our gorgeous city looks amazing on film.”
The decision comes after several cast and crew members, including Grace and co star Ethan Kai, as well as directors Adil El Arbi and Bilall Fallah, were pictured filming in Scotland.
In January, the Trongate area of Glasgow was transformed by set builders into the famous Gotham city with alterations made to shop fronts and police cars.
Batgirl was due to focus on Barbara Gordon, played by Grace, the daughter of Gotham police commissioner Jim Gordon.
British film critic and journalist Helen O’Hara separately tweeted: “This Batgirl news is appalling for all the cast and crew who worked hard on the film, and I hope for a swift U-turn by the studio. This ain't the way.”
Some of the big-name productions shot in the city last year included The Flash; the fifth Indiana Jones film; Batgirl, the first major film production to be entirely based in the city; Tetris; Annika; Shetland; The Control Room; and Screw, the latter being filmed in the Kelvin Hall.
Other recent productions shot in Glasgow include World War Z, Under the Skin, Outlaw King, The Wife, Hobbs & Shaw, Outlander, Succession, Still Game and Vigil.
A new TV studio is being developed at the city’s Kelvin Hall thanks to almost £7.9m of funding from the Scottish Government and £4m from GCC.
The Kelvin Hall Film and Studio Hub, to be completed in the autumn this year, will become a centre for TV broadcasters and production companies.
Warner Bros has also chosen to shelve animated sequel Scoob! Holiday Haunt.
A spokesperson for the company said: "The decision to not release Batgirl reflects our leadership's strategic shift as it relates to the DC universe and HBO Max.
"Leslie Grace is an incredibly talented actor and this decision is not a reflection of her performance.
"We are incredibly grateful to the filmmakers of Batgirl and Scoob! Holiday Haunt and their respective casts and we hope to collaborate with everyone again in the near future."
DC has been contacted for comment.