Lapland New Forest at Matchams Leisure Park near Ringwood in Dorset has been the focus a storm of controversy since it opened on November 28.
Trading standards has received over 2,000 complaints about the attraction, which charges between £25 and £30 each to enter.
Many people have also contacted local papers and radio stations claiming chaotic queues of up to three hours in the wet and cold to see Santa.
There have been reports of violence flaring at the site with Santa being punched in the face and elves also pushed by angry visitors.
Many visitors also complained that a "magical tunnel of light" turned out to be a line of trees with some lights on them and log cabins resembled B&Q sheds.
Reindeer and huskies were also penned up or tethered almost out of sight and an ice rink was not working.
A spokesman for Dorset Police said: "We have been told that the Lapland New Forest attraction has this morning been closed permanently and that contractors and stall holders are leaving the site."
The spokesman added that police were called to the attraction this morning over fears there would be a breach of the peace because some contractors had alleged they had not been paid.
He said no one was arrested and police did not close the site.
Outside the gates, the entrance was coned off with a "closed" sign a foot high in place. People are asked to look at the website for further details but nothing has been added.
Over the last few days it appeared there had been very few visitors to the attraction.
Henry Mears, the event's advertising manager, from Brighton, has been unavailable for comment since Monday but at the weekend he blamed the complaints on a small number of troublemakers and said the ice rink had been fixed.
He denied visitors had been ripped off but admitted family illness and unreliable staff had caused problems initially.
But families were not amused and called the site a scam, a joke and looking more like a car boot sale than Lapland.
Trading standards officers from Dorset County Council said they had visited the site but did not have the power to shut it down.
Tickets cost £30 for individuals, £25 for each person for families of four or more, and £10 for children under two years old.