Columba College has cancelled the event on Saturday after taking advice from police.
Jill Chisholm, whose daughter attends the school, said much effort went into organising a venue, music, food and wrist-band entry system.
Partygoers were allowed only three alcoholic drinks.
"A can of worms has been opened. The kids will have private parties afterwards or they will go into town.
"I was seeing red.
"Now all that [organisation] is totally wasted.''
Police gave a routine briefing to pupils recently about the after-ball function, and Mrs Chisholm questioned the seemingly abrupt change.
"All of a sudden they can change the laws just to suit themselves. It must have been illegal all the years that [parties have] been running.''
Jenna Chisholm (18) said she was disappointed the long-anticipated "privilege'' of attending the party had been removed.
Pupils were told the news on Tuesday, and had received ticket refunds.
Jenna felt sorry for organisers who would be out of pocket, and said the problem should have been flagged well before ball season.
Columba College principal Juliette Hayes said the school cancelled the party after liaising with police.
She feared it could mean pupils organised their own parties.
"That is continually a concern because, I guess, an after-party is something that is structured and well organised and well supervised,'' she said.
John McGlashan College principal Neil Garry was unavailable yesterday but it is understood a ball after-party function on May 21 has been cancelled.
St Hilda's Collegiate principal Jackie Barron said no decision had been made about the school's ball after-party on June 10, but acknowledged St Hilda's was likely to "follow suit'' and cancel.
"The police have helped students and parents run after-parties in the past.
"[Police alcohol harm reduction officer Sergeant Ian Paulin] has always been incredibly supportive of the students and parents running the after-parties. If the directive has come that it is illegal, then we will be following the law.''
Police wrote to Canterbury school principals earlier this month saying anyone organising a ball after-party with an entry fee risked being prosecuted and fined up to $20,000.
The letter stated people who organised, managed, sold tickets, charged an entry fee and provided security were breaking the law unless they had a special licence to buy and sell alcohol, which was not possible for BYO parties.
It also said people attending those types of events were generally committing an offence.
Police advice on the events changed after a decision in the Napier District Court established the parties were a "place of resort'' for the consumption of alcohol under the Sale and Supply of Alcohol Act.
A factor in establishing their status under the Act was that partygoers paid to attend.
In the South, Otago Coastal Area Commander Inspector Jason Guthrie rejected a suggestion schools had been told the parties were illegal, but confirmed police had highlighted the new interpretation of the Sale and Supply of Alcohol Act.
"There is a provision in the Act which would allow a parent/guardian or a responsible adult to supply alcohol to a minor if they have express permission from the minor's parent or legal guardian, and the alcohol is supplied in a responsible manner.
"Ideally, express permission would be a phone call between parents. Written consent would only be acceptable if the supplier was satisfied that the consent was in fact supplied by that teen's parent or guardian,'' Insp Guthrie's statement said.
