Peebles Poultry Show expected about 1,500 entries on 26 February but it has now been confirmed it will not be held.
Hazel Dickson, of Peebles and District Poultry and Bantam Club, apologised for the "disappointment and hassle" the decision would cause.
"We had hoped, like many, that the situation would settle quickly," she added.
"Having studied the Department for Environment, Food and Rural Affairs communications as well as Animal and Plant Health Agency information we feel that we have no choice but to cancel."
The Scottish government announced in December that all poultry and captive birds must be kept indoors, after a Europe-wide alert over avian influenza.
The initial restrictions were for 30 days but the discovery of wild birds with the H5N8 strain in Scotland, England and Wales has led to the outdoor ban continuing.
Last week it was confirmed the restrictions would remain in place until the end of February, at the earliest.
Poultry owners from all across the UK head to the Borders every February for the Peebles Show.
Last year's record numbers saw 1,029 competitive birds displayed at the Burgh Hall.
The Peebles club will now turn its attentions to the regional summer show in August and next year's 30th anniversary event in February.
One of Scotland's largest bird shows has been cancelled due to restrictions over avian flu.