It launched the link two years ago following requests from the business community, but it flies with half the seats empty.
While not putting a figure on how much will be saved by the move, which will see it drop the ATR-42 from its fleet, it has been described as 'substantial'.
The airline was predicting losses of up to £5m. a year between 2017 to 2019.
It has also announced that it will take over baggage handling at Gatwick.
'The decision to end our London City service was not taken lightly, but after considerable effort and investment, it has just not proved to make commercial sense,' said Aurigny CEO Mark Darby.
'There are a number of key factors at play, not least the high costs of operating to London City and the lack of demand for the route.
'Despite our very best efforts and regular promotions, there sadly is not sufficient demand to make this service work.'
The last flights to City will be on 27 October.