Under new US visa regulations, introduced since the 11 September attacks, applicants from Iran, Iraq, Syria, Libya and Sudan are subjected to rigorous security checks before being granted a visa.
Mr Qobadi - who won the prestigious award for the film The Songs of My Motherland - said he was refused a visa despite the fact that he had filed his application four months ago and has travelled to Dubai twice for interviews at the US embassy.
In a letter to the festival organisers, Mr Qobadi said "a country which rejects the visa application of an artist, better keep the prize of its festival for its own authorities".
Not alone
Mr Qobadi is the second prominent Iranian film figure in less than a month to fall victim to the stricter US immigration policy.
Renowned Iranian director Abbas Kiarostami - who won the Palme d'Or at Cannes for Taste of Cherry in 1997 - was unable to attend the screening of his latest film, Ten, at this year's New York Film Festival.
The efforts by Harvard University, Ohio State University and the chairman of the New York Film Festival's selection committee Richard Pena to secure a speedy visa for Kiarostami failed.
Several prominent personalities came out in his support.
The former French culture minister, Jack Lang, quoted by the French daily Le Monde, said the US treatment of Kiarostami was "isolationism and ignorance reduced to disdain for other cultures".
The Finnish film director Aki Kaurismaki also boycotted the New York Film Festival in support of Kiarostami's case.
Voicing concerns
Now many in the art community fear the new rules could prevent other prominent and promising artists from showcasing their work in the USA.
Mr Pena told BBC News Online: "These laws make the chance for artists to visit USA and interact with US audiences, critics and artists that much more difficult."
Director of cinema at London's Institute of Contemporary Arts (ICA) Jane Giles, agreed.
"Film festivals need the attendance of filmmakers for the press reviews and Q&A with the audience which will market the film to a wider audience in the country," she said.
"This undoubtedly is America's loss given the extraordinary artistic relevance of films from abroad - particularly at this time films from the Middle East."