The proposed 230-hectare complex in the heart of China's Pearl River delta industrial heartland in Guangdong province had also sparked unease in neighboring Hong Kong and Macau.
Authorities in the gambling enclave had formally raised the issue with their Guangdong counterparts, the South China Morning Post reported.
A one-line statement published on the Heshan city government's website said that "to respect people's desire, the Heshan government will not propose the CNNC project".
State-run China National Nuclear Corporation and China Guangdong Nuclear Power Corp (CGNPC) had planned to build the 37 billion yuan ($6 billion) project.
Officials from both companies could not be reached for comment.
A Beijing-based nuclear power expert said he was surprised local authorities had taken the decision as the project designed to produce 1,000 tonnes of uranium fuel annually by 2020 was hotly contested by local governments.
"Compared to a nuclear power plant, a uranium processing facility is way more safer, as there is no fusion or reaction taking place in the production process," said the official with close knowledge of the project. He declined to be identified as he was not authorized to speak to the press.
The surprisingly swift decision to cancel the project came after hundreds marched to city offices on Friday that forced officials to pledge an extension of public consultation by 10 days. Locals had planned more protests on Sunday.