The anti-bullying initiative, run by Victim Support, has counselled dozens of secondary school students across the county since its launch a year ago.
The government's support service for teenagers, Connexions, has said although it will not be able to provide more funds, similar services are available.
Victim Support says it is devastating for frightened youngsters who suffer at the hands of other pupils.
"
It's not the only service for these young people - but it's still sad if we lose anything
"
Tom Whitworth,
Connexions
About 90 students have been helped by Victim Support's anti-bullying project.
Co-ordinator Karen Johns said: "Some people experience physical bullying, punching, kicking.
"There's verbal name calling and rumour spreading.
"There's also mental and emotional bullying.
"They might isolate people from the groups, so they won't let them enjoy games.
"I've also had to deal with racist and homophobic bullying."
But now the project faces closure.
Victim Support Area Manager Sally Piper is upset about the funding loss.
She said: "It's really disappointing. We feel as if we've started something here, something positive.
"And to find funding is not going to be renewed is a devastating blow."
Alternative support
Connexions now says it can only help with staffing.
Connexions' Cornwall manager Tom Whitworth said Victim Support was not the only source of help for youngsters.
He said: "We've got staff working in all the secondary schools in Cornwall, the schools themselves have also got trained staff.
"It's not as if it's the only service for these young people. But it's still sad if we lose anything at all.
Victim Support says it is now trying to find alternative funding.