The October 20 party at the campus was to be scaled down this year, but now it has been called off altogether due to slow ticket sales.
The party is to celebrate the end of lectures.
Lincoln residents are concerned students will now use flats to party hop.
“So now we have the risk of students and their friends celebrating in the community with no support of St John and Red Frogs, no one managing the amount of alcohol served/consumed and we just have to keep fingers crossed that the day passes without incident,” a post said on the Lincoln Community Facebook page.
Red Frogs is a volunteer Christian youth charity that has assisted the university in running the event, along with other security measures.
Another Facebook poster said she was “so sad for the students”.
"I hope that Garden Party comes back next year bigger and better than ever.
"So short-sighted of whoever made the decision to change it, simply takes the end-of-year celebrations away from a controlled environment."
The Garden Party traditionally hosted students from Lincoln and Canterbury universities, but it was scaled back to allow Lincoln students only this year and was given a new name, the Lawn Party, before being cancelled entirely.
The party is a Lincoln University Students Association (LUSA) event.
The Selwyn Times wanted to ask LUSA if it could give Lincoln residents an assurance students would behave themselves.
Lincoln University would also not respond to that question, saying it was a LUSA event and questions needed to be answered by the association.
In a statement to students on Facebook, LUSA said: "We explored various options to keep the event viable, but unfortunately the low ticket sales made it financially unfeasible to proceed.
"We understand that many of you were excited about attending the original Garden Party and we are sincerely sorry that we couldn’t make it happen this time."
But LUSA is expecting students to celebrate in Lincoln.
"We expect an increase of students coming into the area, to continue with their tradition of celebrating the end of lectures.
"However, instead of coming to our event, students may choose to host their own small-scale celebrations within the community."
Police have been in contact with LUSA, but won’t say if they will have extra officers in Lincoln for "operational reasons".
- HAVE YOUR SAY: Do you think the Garden Party should have gone ahead? Send your views in 200 words or less to daniel.alvey@starmedia.kiwi