The Iraqi Special Olympics team has confirmed it will not be coming to take part in the games in Ireland.
Larne council were informed of the decision by fax
The young people were expected to stay in Larne during the international competition in June, but they have now pulled out because of the war.
The mayor of Larne, Bobby McKee, said he was disappointed at the decision.
He said the Iraqi team informed the council of the move on Monday night.
"We in Larne are devastated and Larne Borough Council is very concerned that this is not taking place.
"The fax message came through to Larne Borough Council saying that it wasn't happening - they weren't travelling at this present time but later on they may if the war is over or settles down," he said.
A sign erected to welcome the Iraqi team to the County Antrim town was vandalised last week.
Service families in the area said the signs were inappropriate and called for them to be removed.
Others went a step further by defacing the sign with the words "Ulster says no".
A council statement said it was mindful of the genuine concerns of people, but it should be pointed out that this was nationally supplied signage.
It added that as a council it was not prepared to stand in judgment of these young people for whom the World Special Olympics meant so much.