Seafair spokeswoman Melissa Jurcan said the festival received official word from the Navy on Tuesday morning that the fighter jet demonstration team would not be making the trip to Seattle for 2013.
Sequestration prompted the Department of Defense to prohibit military aerial demonstrations along with other cost savings measures, and the Navy said it was cancelling all remaining Blue Angels performances for the year.
Seafair CEO Beth Knox said the Blue Angels "will be deeply missed."
The Blue Angels have been part of Seafair for 40 years, and Knox said she is hopeful that the team will return to Seattle in 2014.
Later Tuesday, the Navy also announced there would be no Navy ship vessel visits during the Seafair Fleet Week, also citing the federal budget cuts.
Seafair officials previously announced that the civilian Patriots Jet Team, Red Eagle Air Sports, and Lucas Oil Air Show teams would be performing in this year's air show.
A spokesman for the Navy said team members would be allowed to fly minimal hours to maintain flight proficiency in the F/A 18 fighter jets, but the six-jet squadron would discontinue group practices for the remainder of the season.
The Navy also said they hope to partake in future fleet week events as their budget situation allows.