The board of the organisation promoting Edinburgh to the world has resigned "with immediate effect," putting 16 jobs at risk.
The move came after councillors rejected a funding plea to take forward a new strategy.
Marketing Edinburgh was set up by City of Edinburgh Council in 2011.
The council-owned company is set to lose all its funding as the authority tries to cut between £30m and £40m from its budget next year.
Last year, Marketing Edinburgh's former chief executive John Donnelly agreed to a compromise of a £300,000 cut, dependent on becoming self-sustainable by April 2020.
Last week the organisation tabled new proposals which would have seen a change in emphasis from promoting tourism, to helping manage the industry.
In a letter, the outgoing chairman of Marketing Edinburgh Gordon Robertson said: "All non-executive directors, including the councillors and myself resign with immediate effect.
"This is the only plan the board feels would meet the needs of the city by involving all, providing a forum for tourism beyond the current and driving change.
"We therefore have no option but to step aside and allow you to proceed the council to appoint directors that share the council's view and plan and immediately put in place what is needed to execute your plan."
Films and conventions
Film aspects are now set to be transferred to the city council while the authority will investigate options to continue promoting conventions coming to Edinburgh.
Mr Robertson said the council was trying to maintain these roles on a "quarter of the funding they are currently on".
He urged the council to re-deploy the 16 staff members whose jobs were at risk as Marketing Edinburgh winds down.
A new sustainable tourism strategy is being drawn up which will include a new dedicated tourism management job.
The council's convener of housing, homelessness and fair work, Kate Campbell, said she was disappointed by the resignations, but thanked the board members for their work.
She added: "Clearly this will be an uncertain time for Marketing Edinburgh's employees and they have to be our priority and focus now. Our officers will be working closely with them over the coming weeks and months to offer their full support and to look at what the options are for the future."