If the concert is held, there are concerns the singer, her crew and attendees may be in harm's way, said Minola Sebayang, the lawyer for the promoters.
"This is an advice from her security team. So the cancellation is purely based on the decision made by her management," Sebayang said.
Earlier this month, Jakarta police recommended that Lady Gaga's sold-out June 3 show not be issued a permit because of security concerns.
The pop diva appeared to acknowledge the incident in a post on Twitter on Saturday: "There is nothing Holy about hatred."
Islamists and conservative Muslims have decried Lady Gaga's upcoming concert, saying her revealing costumes and sensual dance moves are forbidden by Islamic law.
The chairman of the Islamic Defenders Front, Habib Rizieq, said his group could not guarantee security if the concert were held.
Indonesia has the largest Muslim population in the world.
In March, the pop star got a thumbs-down by the country's highest Islamic authority, according to The Jakarta Globe.
Indonesian Council of Ulema chairman Cholil Ridwan was urging Muslims not to attend the controversial singer's upcoming concert in Jakarta, the newspaper reported.
"(The concert is) intended to destroy the nation's morality," Ridwan told the Globe.
Ridwan is concerned that the singer's revealing outfits and sexy dance moves will set a bad example for Muslim youths.
Newspaper reports said more than 25,000 tickets were sold in the first two hours after the concert went on sale in March. Police said the promoter should not have started selling tickets before getting a permit.
This is not the first controversy surrounding the singer's "Born This Way" tour. Gaga also ran afoul of Christian groups in South Korea, prompting the government to ban kids under the age of 18 from attending her show.
Last week, Christian groups in the Philippines protested Lady Gaga's performances there Monday and Tuesday.
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