Dumfries and Galloway Council and Scottish Enterprise are assessing the consequences of Stena Line's decision not to relocate its Scotland to Belfast ferry service to a site further down Loch Ryan at Cairnryan.
The move would have released land for a marina, transport interchange, shops, housing and Scotland's only regional casino.
However, in a surprise announcement, joint venture company Port of Cairnryan said the project, which has secured planning permission and was due for completion in 2009, is no longer economically viable.
"This is disappointing news," said council chief executive Philip Jones. "We remain committed to the wider regeneration project."
He added: "Our priorities are to encourage Stena to consolidate its position as one of the area's main employers, attract investment and secure a commitment from Scottish Enterprise that agreed regeneration funding remains in place."
The waterfront development is a joint initiative by the local authority and Scottish Enterprise to turn Stranraer into a marine and leisure destination. The promoters hope that at least some part of the scheme may be salvaged.
Despite the setback, Scottish Enterprise Dumfries and Galloway operations director Stuart Dixon remained optimistic. "We are exploring all options for the development of the waterfront as a leisure marina," he said.