Hull has lost out in its bid to turn aircraft carrier HMS Illustrious into a tourist attraction on the city's waterfront.
Hull City Council confirmed it had missed out on the Ministry of Defence shortlist for the decommissioned ship.
The vessel would have been docked next to aquarium The Deep, for Hull's City of Culture celebrations in 2017.
The 20,000-tonne carrier has been retired from the Royal Navy after 32 years of service.
Labour leader of the council Stephen Brady said he was "disappointed" at the decision.
"We've had a significant amount of public support throughout," he said.
"And although we gave it our best shot, it was made clear during the bidding process that the MoD intended to strip the vessel of its historic assets, and were unwilling to provide any long-term funding which, in fact, made it economically unviable as a heritage attraction.
Mr Brady said the city intended to continue with its plans to develop a cruise ship terminal.
Lib Dem councillor Claire Thomas criticised the Labour authority for spending money on the bid.
She said: "There are some really serious questions to ask now about why the council decided that it was a good thing to do to spend over £500,000 on trying to get HMS Illustrious to Hull when actually now it turns out it's not coming."
In a statement, the council said it had set aside £540,000 to develop a riverside berth that could be used for cruise ships and other vessels as well as a home for HMS Illustrious.