Budget airline AirAsia X will cut direct flights between Kuala Lumpur and Adelaide after barely more than a year in service.
The last flight from Adelaide will depart on January 25.
An AirAsia spokesman said on Friday the airline could not justify continuing the unprofitable route.
"The Kuala Lumpur-Adelaide route unfortunately hasn't been profitable, and in light of difficult trading conditions for us in Australia, we've had to make this decision," he said.
"We greatly regret any inconvenience this will cause to passengers."
The Malaysia-based carrier launched direct flights between Adelaide and Jakarta in October last year, in a move lauded by the South Australian government.
Air Asia X flagged last month that it would drop some flights to Australia, while increasing services in North Asia and other regions.
The budget airline's Australian operations recorded a loss before tax of 121.4 million ringgit ($41 million) in the September quarter.
A spokesman said passengers who had booked flights beyond January 25 were being contacted and would be given the option of a refund.