Urban Gravesham lost a High Court judicial review last month.
Campaigners claimed Gravesham council had not made its planning decisions properly, but the judge dismissed the application.
Spokesman Geof Foxwell said the society simply did not have the resources to fight the Kent local authority and developers.
He said the result of the judicial review had been a great disappointment.
But he added Urban Gravesham was proud of its record in holding the planning department to account and would continue to fight to give local people "a real say" in the process.
He said: "We have accepted the judge's decision and will not appeal."
Urban Gravesham had objected to plans to build homes, restaurants, a hotel and new shops in the town, branding the scheme an "over-development" it claimed would "completely overwhelm the heritage quarter".
But when the scheme was approved, the council said there were "no good planning reasons" to turn down £125m of development, 1,000 jobs, retail and 500 new people living in the area.
After the High Court ruling last month, the council said its planning decision had been "vindicated".
A civic society has dropped its legal battle against a £125m redevelopment in Gravesend's heritage quarter.