The filmmaker, nicknamed the Pope of Trash, last year announced his plans to make a kids Christmas movie starring Johnny Knoxville.
He described the film, to be titled Fruitcake, as "Little Rascals on acid".
But the movie has been axed, and Waters is blaming the economy, and unpredictable studio executives.
He says, "I can't get it made.
"It's a children's movie. I thought it would do well, but it's not."
And he insists he is baffled by the decision: "I saw The Reader. Here's a movie that asked you to root for a paedophile Nazi guard. That got made."
Waters admits he is worried about where his next paycheque will come from - now his Broadway shows Hairspray and CryBaby have closed - adding, "In this economy, I'm going to have to do a puppet show."
Similar News ItemsJohnny Knoxville
- Love Island is back! Meet the 12 sexy singles taking part this series (From Digital Spy - TV news. 1 June 2015, 4:01 PM, PDT)
- "Teenage Mutant Ninja Turtles: Half Shell" - More Leaked Images Of Megan Fox (From SneakPeek. 29 May 2015, 8:41 AM, PDT)
- "Teenage Mutant Ninja Turtles: Half Shell" -'Shredder', 'Bebop' and 'Rocksteady' (From SneakPeek. 28 May 2015, 3:56 PM, PDT)
- Strange Magic movie review: bad spell (From FlickFilosopher. 24 May 2015, 11:36 AM, PDT)
- Brittany Snow hates her red hair in new movie Pitch Perfect 2 (From National Ledger. 13 May 2015, 1:43 AM, PDT)
- NBC Sets 'The Wiz' as Next Live Musical, Featuring Cirque du Soleil (From Moviefone. 30 March 2015, 9:35 AM, PDT)
John Waters (I)
- John Waters to College Grads: "It's Your Turn to Cause Trouble" (From The Hollywood Reporter. 31 May 2015, 12:18 AM, PDT)
- Killer Mike on Bill O'Reilly: 'More Full of S--t Than an Outhouse' (From Rolling Stone. 16 May 2015, 10:15 AM, PDT)
- Peaches Christ: A True Icon of Fright (From Icons of Fright. 5 May 2015, 10:36 AM, PDT)