Warehouse 23 on Smyth Street has hosted the likes of former Smiths guitarist Johnny Marr, John Lydon's Public Image Limited, and Joy Division, and New Order founder Peter Hook.
It was a key venue for gigs as part of Long Division Festival and the city's biggest-capacity live music venue in its own right.
Managing director Joe Lally said money had become too tight and the venue was not able to secure the funding it needed to stay open.
He said: "My heart did not want to make the announcement. It was a business decision based on numbers, I'm as gutted as everyone else. No one is more sorry to see it go than I am.
Joe said since Unity Hall had already ceased to operate as a live music venue there was now no place left in the city that could accomodate big acts.
Vortex Bar on King Street and the Counting House at the top of Westgate have live music areas but they are smaller and would not be equipped to host gigs on the same scale, Joe said.
He said: "We've had From the Jam, Iron Maiden bassist Steve Harris on his British Lion tour, Peter Hook and the Light, we had Black Grape, Johnny Lydon's PiL - one of the biggest names in punk - and no disrespect to them but other venues aren't big enough. Wakefield doesn't have venue that is capable of doing that anymore.
"People who have commented are saying Wakefield's music scene is now dead. There is nowhere else like it to play."
Warehouse 23 had been closed for 13 months due to the pandemic and was facing at least two more months before it could open again.
He said the venue contributed a lot to the city's night time economy with more people visiting the neighbouring bars and restaurants around the Westgate area.
He said: "When we put Johnny Marr from the Smiths on it was a sellout 938 people in the building. We forgot to tell some pubs around us that he was on and two of them rang us up the next day and said 'what the hell did you have on' last night?'
"They said they took more money that Tuesday or Thursday night with two bar staff than they usually would on a Friday with five."
The closure is a blow to the city's recovery and Joe expects other venues may struggle in the coming weeks and months.
Many of the gigs that were due to go ahead at Warehouse 23 have been moved to Joe's Birdwell Venue in Barnsley to honour any tickets purchased.
The following shows have been successfully moved and are as follows:
Total Stone Roses (27/03/2020) is now 29/10/2021
Limehouse Lizzy (03/04/2020) is now 30/07/2021
Livewire AC/DC (04/04/2020) is now 27/12/2021
Bootleg Blondie (10/04/2020) tbc in 2022
Absolute Bowie (24/04/2020) is now 25/09/2021
The Smyths (05/06/2020) is now 04/02/2022
Fleetwood Bac (27/06/2020) tbc in 2022
Cock Sparrer 26/09/2020 - no date change
MAC LADS 22/10/2020 - no date change
FM 02/04/22 is now 31/03/2022
The venues are still working on some more gigs to be moved.
Joe added: "Thank you to everyone who has supported Warehouse 23 over the years! These are sad times."