Power company Scottish and Southern Energy (SSE) has abandoned plans for a windfarm in the sea off Kintyre.
The Perth-based group had intended to develop the windfarm 2km off the west coast.
However it said the location was too close to local communities and Campbeltown airport and it would disrupt recreational sailing.
SSE has decided to concentrate on another site 13km from Islay.
The proposed offshore development was hugely controversial in Kintyre.
Some feared it could damage the development of tourism in the area and destroy a seascape which inspired one of Scotland's greatest artists, William McTaggart, in the 19th Century.
The Kintyre Offshore Wind Farm Action Group, which had campaigned against the proposal, described SSE's decision as a victory for common sense.
Secretary Nick Henley Price said: "The group has argued consistently that the proposed site was totally inappropriate and that had the windfarm gone ahead there would have been a significant detrimental effect on tourism and consequently, on employment in Kintyre, and on nearly every aspect of life in the area.
"We have fought and won but the real victor in this case is common sense."
Scottish and Southern Energy said it remained committed to developing the Islay site although the weather and seabed conditions were making it difficult.
Colin Hood, chief operating officer of SSE, said: "Islay has massive potential to contribute to the Scottish and UK governments' renewable energy targets.
"Our proposed timetable for developing this site will allow time for the innovative development of the offshore technology and construction techniques necessary to build a windfarm in such a challenging environment."
SSE has stake in one of the UK's biggest offshore windfarms, Greater Gabbard, off the Suffolk coast, which began producing electricity earlier this year.