Following the cancellation of the first gay pageant last week, China will not be sending a national finalist to the Mr Gay World competition next month.
The pageant was due to take place on Friday but was shut down by police hours before it started.
Organisers were told they had not applied for permits correctly after the pageant received worldwide media attention.
Organiser Ben Zhang had planned to select a winner from the eight contestants privately but said today the decision had been taken not to.
He would not state why, instead telling Associated Press: “This was a very carefully considered decision. We just cannot send anyone, the organisers and competitors came to this decision together.”
Co-organiser Ryan Dutcher told CNN that he had ensured all permits were correctly applied for.
Several of the eight participants reportedly planned to use the pageant as a way of coming out.
Since the event was shut down, several other gay-related events have been cancelled by police.
An AIDS charity called Aizhixing had several meetings cancelled, while a state-sponsored and UN-supported radio talk show on HIV issues was also postponed.
China only decriminalised homosexuality in 1997 and it was seen as a mental illness until 2001.
The cancellation of Mr Gay China follows several small advances for gay rights in the country.