Officials said heavy rains in Bethlehem on Saturday night sent waters from the Monocacy Creek over much of the music grounds and cut into attendance.
ArtsQuest officials said two venues - the Volksplatz and Handwerkplatz - would be closed Sunday, the festival's final day. Music at other sites was to go on as scheduled.
Musikfest President Jeffrey Parks said rain on six of 10 days had left the festival about $750,000 in the red. On Sunday, he issued a plea to the community to help make up the difference.
Authorities said the creek flooding in the historic section of the city caught some by surprise Saturday night as vendors scrambled to salvage merchandise and equipment.
"One guy had African drums for sale that weren't cheap, and they were just floating down the creek," Bethlehem Assistant Fire Chief David Ruhf told The (Allentown) Morning Call.
Ruhf said propane tanks and coolers were floating in the floodwaters, and some vendors lost items down the creek.
Officials of the nonprofit Hogar Crea, which helps addicts trying to turning their lives around, said water surging into their popular shish-kabob stand Saturday night left four massive grills bobbing in the water, commercial freezers overturned and 1,000 kabobs - which would have been sold Sunday for $6 each - plunging into the water.
"Basically, we lost everything - the food, the equipment, everything," Ivan Delvalle, director of treatment at the Freemansburg center, told The Morning Call. "The Musikfest fundraiser usually carries us through the winter. I'm not sure what we'll do."