Marineland will be permanently closed and the site cleared "ready for something new."
More than two years after the marine park closed to the public, Napier City Council announced this morning it will not be reopened.
The decision came after the government confirmed it would not support marine mammals being kept in captivity.
Napier Mayor Barbara Arnott said the government's stance, and the need for major upgrades at the aging facility, forced the council's hand.
The decision was made to "close the facility and clear the site ready for something new".
Mrs Arnott said many alternative options were considered for the site, but none were convincing or feasible, given the cost to the ratepayer.
Due to the "extremely harsh marine environment" the underground infrastructure at the site, such as piping and pools, was beyond its useful life and needed complete replacement.
"As a council we completely recognise the importance of this site to Napier's tourism package and, therefore, will continue to explore all options for development of a modern, unique attraction for the benefit of both our local community and visitors to the city," she said.
Marineland's little blue penguins will be moved to the National Aquarium, also on Marine Parade, where a purpose-built enclosure will be built by November.
Its not yet known what will become of other animals which continued to be housed at the facility after it closed.
Education programmes run from Marineland will also move to the Aquarium, the council said.
Staff will be offered other roles within the council where possible.
"The council acknowledges the devotion and high level of care that Marineland staff have provided the animals and recognise this is a difficult time for them," Mrs Arnott said.
"We will work through this situation with staff in the best way possible and also endeavour to relocate staff into new roles within Napier City Council facilities."
The Minister of Conservation, Kate Wilkinson, confirmed to the council last month that the government wanted to phase out captive marine animals, particularly dolphins.
Ms Wilkinson said the government was also "firmly opposed" to the international trade in dolphins.
The Department of Conservation was also opposed to keeping to breeding captive any marine mammals, particularly dophins.
Holding indigenous mammals for public display is not in the long-term interests of the species, the department said in a letter to the council this year.
Opened in 1965, Marineland closed in September 2008 after the death of its last dolphin, Kelly, saw visitor numbers plummeting.
It was reopened for one more summer season before closing again. School groups still visited the facility, which held more than 50 animals, including seals and penguins.
City ratepayers paid more than $530,000 a year for Marineland to remain closed, covering staff costs and care for the remaining animals.
While open, the council was spending about $300,000 a year on Marineland.
Napier's Marineland to be closed and cleared
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