Residents of Queensland's Mary Valley are planning a celebration after federal Environment Minister Peter Garrett formally vetoed the controversial $1.8 billion Traveston Crossing Dam.
Mr Garrett, last month in his initial assessment, rejected the state government's plan to dam the Mary River near Gympie, north of Brisbane.
The minister had a 10-day consultation period, giving all sides a chance to comment on the decision. His final decision, announced on Wednesday afternoon, backed his original assessment to scrap the dam.
"After carefully considering all the information ... I have concluded that the Traveston Crossing Dam cannot go ahead without unacceptable impacts on matters of national environmental significance," Mr Garrett said in a statement.
"As I stated when I made my proposed decision on this project, all of my decisions under the national environment law are based primarily on science, and the science is very clear about the adverse impacts this project would have on the nationally protected Australian lungfish, Mary River turtle and Mary River cod."
The final decision has given residents of the Mary Valley cause for celebration, with a party planned for December 12 at Kandanga recreation ground.
Greater Mary Association president Darryl Stewart said it was a major victory for a community that had fought hard for more than three years to protect homes, the river and its wildlife.
He said there was still a lot of work to be done to rebuild the community.
"Some people who had their properties purchased (by the state government) have moved on and they won't come back," Mr Stewart said.
"We will certainly be working hard to build another vibrant community for the Mary catchment."
The Queensland opposition is calling for Premier Anna Bligh to visit the Mary Valley to discuss the area's future.
Liberal National Party (LNP) member for Gympie David Gibson said the government needed to work with the local community on a recovery plan, which could also include a freshwater species conservation.
Ms Bligh said there was no surprise in Wednesday's decision.
"I think we expected that what Peter Garrett said a couple of weeks ago would be what his final decision was," Ms Bligh said.
"We're getting on with the job now of investigating a future water supply for southeast Queensland."