The development has been proposed for Ladies Mile, just north of Queenstown Airport, and offers hundreds of residential units.
There were also plans for a commercial centre, an early childhood centre and the commercialisation of the historic Glenpanel Homestead.
Development director Mark Tylden said the news was a "slap in the face".
He criticised the Queenstown Lakes District Council for hindering the Flint’s Park, Te Putahi-Ladies Mile project and not considering a "broader view" despite the widespread struggle in the area.
"Queenstown’s housing shortage and worker shortage will continue until something serious is done about housing supply", Mr Tylden said.
The decision to refuse resource consent was made by an expert consenting panel, which considered a variety of environmental, economic and social factors.
Comments were made to the panel by local and national groups, including residents, ministers and the QLDC — which raised concerns throughout the process about how consent might clash with the Te Putahi-Ladies Mile master plan.
The effects on State Highway 6 were also a big factor, Minister of Transport Michael Wood noted in his comments to the panel.
He was concerned about the impact on the road’s capacity and functionality with the proposed infrastructure.
Mr Tylden said despite the blow he and the developers would carry on, but he was unsure whether they would go through the longer process to get consent through the Resource Management Act.
The Flint’s Park West development is still in a separate fast-track application process.
