The Castlemaine State Festival board shared the news on Thursday, March 28, with its members saying the decision was made with "deep regret".

"Despite significant efforts to return the Castlemaine State Festival to profitability after heavy losses in 2023, the board has made the reluctant but necessary decision to enter into voluntary administration," the board said in a statement.

"We understand that this will be upsetting for the many people who have supported, enjoyed and championed our festival over many years, as it is for the board and staff."

Deloitte Financial Advisory were appointed administrators on March 26 and have taken operational control of the festival.

They will investigate the circumstances leading to their appointment and assess all operations available to restructure operations and find a path forward.

The board hopes the advisors can find a way to preserve the legacy of the festival.

Castlemaine State Festival began in 1976 and has been held every two years since.

The event was set in historic churches, theatres and public spaces and featured music, performances, visual arts and film, and more than 70 open studios.

Former director Glyn Roberts left the festival last year, moving to Townsville, Queensland.

"We are grateful for the longstanding support of the Victorian Government through Creative Victoria, Mount Alexander Shire and our patrons and donors, and we value the extraordinary community at the heart of this festival," the board said.

"It's too early to know where this process will take us but we hope to be in a position to involve our community more fully in our recovery efforts at the appropriate time."

Deloitte was contacted for comment but had nothing further to add.