The Save the Tasmanian Devil program has missed out on its federal government funding request for $4 million over four years, meaning its overall budget has been halved. Devil populations have already been decimated by the facial tumour disease.
Wildlife biologist Nick Mooney is disappointed by the decision.
He wants the money to isolate healthy devils on the Freycinet and Tasman peninsulas, and manage wild devils at Woolnorth in the far north-west.
"It really diminishes the importance of this animal to Tasmania and indeed Australia, and indeed the world," he said.
The rejection has also stunned Androo Kelly from the Trowunna Wildlife Park.
"For me it reflects they don't really have a commitment to endangered species," he said.
Researchers continue to search for a cure for the devil facial tumour disease, which threatens to wipe out the species.