The cultural, entertainment and sporting park on Pham Van Dong Street would be dismantled in two days, and the land would be handed over to the provincial land development center, according to the city People's Committee.
The 10-ha park was built by Nha Trang Star at a cost of $33 million.
It had been approved by the Khanh Hoa Province administration in 2012, and construction began in 2014.
It was supposed to be completed in 2016, but province authorities discovered in 2015 that the project had illegally appropriated around 22,000 square meters along Nha Trang Bay. The developer was fined VND225 million ($9,700) for encroaching on historical sites and not monitoring the environmental impacts.
In 2017 the Khanh Hoa Department of Planning and Investment suspended the project after it kept missing progress deadlines.
In 2019 the province pulled the plug on it.
The land will be used to build a public park, according to the people's committee.