Proposals for the cinema on North Street were put forward in 2008 and granted outline planning permission.
However, that has since lapsed and the cinema plans are now even more in doubt after the council rejected the release of North Street Car Park.
The authority said there was not "sufficient certainty" of development.
The cabinet meeting was held behind closed doors on Tuesday and the minutes were only released on Thursday.
Councillors were told to consider whether getting rid of the car park would represent good value and not whether a cinema would be built, as that was "not guaranteed".
Last month, separate plans for a new multiplex cinema on the site of Scarborough's Military Adventure Park were rejected by the council.
Councillors rejected the recommendation of planning officers to approve those plans over concerns about the impact it might have on the town centre.
Plans for a five-screen cinema in Scarborough town centre have suffered a blow after the council rejected the release of land for development.