Mounts Bay RFC will cease to exist after club members voted to fold the team at their Annual General Meeting on Thursday evening.
Bay have flirted with possible administration since May, but Thursday night was the club's final curtain.
The AGM was told that talks of a possible player-sharing deal with Redruth RFC had broken down.
The Rugby Football Union had also set strict deadlines for the deal, which Bay failed to meet.
The RFU wanted details concerning finances, player recruitment and fulfilment of fixtures in order for the player-sharing deal between Mounts Bay and Redruth to go ahead.
At Bay's AGM, the attendees were told that due to the tight timescale set by the RFU, these objectives could not be met.
Michael Leah, the club's former president told BBC Radio Cornwall that he did all he could to try and secure a move to Redruth.
This is certainly a black day for Mounts Bay and a black day for Penzance rugby
"We just ran out of time and players," Leah said.
"In hindsight, if we'd looked at it a few weeks or months before, it probably would have worked.
"But I must say that Redruth were a breath of fresh air, very helpful and I can't thank them enough."
Leah is set to meet with administrators in Penzance next week to discuss the financial details of Mounts Bay Rugby Club Limited.
Mounts Bay enjoyed a meteoric rise up through the rugby pyramid since their formation in 1999, winning eight promotions in nine seasons.
However, poor attendances and struggles on the pitch saw them relegated from National Two last season, with debts nearing £26,000.
Leah said after many highs, the last few months had been very difficult.
"I think it hit home straight after the meeting, after the vote was taken, and there were a few tears obviously but that's life I'm afraid," he said.
"There is a regret there, a slight regret, but it's been one hell of a ride.
"This is certainly a black day for Mounts Bay, a black day for Penzance rugby but I'm sure something good will come out of something bad."
Mounts Bay's outgoing chairman Arthur Edwards echoed the thoughts of Leah.
Edwards said: "We're very disappointed the club will no longer exist and it's very sad to think the time has come when we have to finish the club."