Fiji's Environment Department has reportedly revoked Freesoul Real Estate's Environment Impact Assessment approval, following substantial environmental damage to the island.
The headman at Solevu Village on Malolo, Orisi Vuninavanua, said more than 20 tourism operations were on Malolo.
There was not enough space for more development, Mr Vuninavanua said.
The alleged damage caused by the firm to beaches, mangroves and reefs had left landowners angry and they would seek compensation from the company, he said.
"This sort of things shouldn't have happened. We have to see that we are protected in terms of what we own," Mr Vuninavanua said.
"So many resorts already there so Malolo will be finished. We have talked about how to stop other developments in Malolo.
"I was really tired and upset about how our elders accept all these developments in our island."
A report by the website Newsroom said the High Court in Suva would hear an application for an interim injunction today to halt work at the resort.
It was being brought by adjacent land owners, who said the developer had wrecked part of their land and caused extensive damage to the foreshore.
Their lawyer, Kenneth Chambers, said he was called by Freesoul's lawyer and told the Environment Department had revoked the developer's approval.
Mr Vuninavanua said landowners were happy with the government's decision but added it should have come much earlier.
Freesoul's plan to construct a multi-million-dollar resort should not have been accommodated by the state from the beginning, he said.
The company had planned to build over 300 bures with some of the bungalows over the water and others among protected mangroves.
"This will be a lesson to all landowners in Fiji. We should be protecting what our elders have left for us including our land, our culture and our language," Mr Vuninavanua said.
"There are 13 resorts already on Solevu and another 10 on Yara - too many. We must stop any further tourism development on Malolo."
In terms of benefits to the locals, there was nothing done for villagers, he said.
"Those investors wanting to come to Fiji and make their money on our lands should ensure the locals are looked after well - jobs, royalties payments, education, housing etc.
"Otherwise they should take their business somewhere else.