The announcement was made Tuesday.
The South Shore Convention and Visitors Authority says the show has been canceled due to the government's sequestration measures, resulting in cuts of the federal budget.
The show was supposed to take place July 12 - July 14.
The Chicago Air and Water Show will run as scheduled August 17-18, however it will likely look different because of the sequester.
As reported in March, the Air Force has canceled all air show appearances and fly-overs not related to combat readiness.
So, unless congress can reach an agreement, the Thunderbirds won't make their usual appearance.