City centre private school St Aloysius' College submitted a planning application last month to create a £4.43million sports complex in Glasgow's Garnethill.
Residents were outraged as they said the plans showed the development would encroach on a small piece of green space believed to belong to nearby flats.
The school, which charges its 1100 pupils up to £10,314 a year to attend, believed it owned the ground and began investigating the claims that the site belonged to others.
More than 60 locals attended an emergency meeting last month to discuss the proposed development.
Now school bosses have withdrawn the plans after members of the Garnethill Community council raised their concerns over the new project, with the school's headmaster saying the withdrawal was due to unclear ownership of the green space.
Community Councillor Bill Beckett said he was "overjoyed with the decision" to remove the plans and added: "I am positive it was the right one to make.
"All those involved will be happy and I would like to thank all who had input in this saga for their support."
Mr Beckett worked with community council chair-woman Jane Sutherland on an objection after the group heard of the plans only days before the deadline.
Jane said: "I'm pleased for my neighbours that the application for this monster sports complex has been withdrawn.
"The stress caused to them with the possibility of their gardens and trees being bulldozed has been really hard and now we all have time to consider the alternatives.
"The College is already a dominant feature in Garnethill with several city blocks of campus buildings to accommodate more than a thousand fee-paying pupils.
"With only one student who actually lives in the neighbour-hood it's not a local amenity, although all the folks who work and study in Garnethill are part of our community.
"There are other sites in Garnethill that might be more appropriate for a sports complex."
School head master John Browne said: "We decided to withdraw the planning application to Glasgow City Council after doubts were raised as to ownership of a small section of land.
"We are now considering the options with regard to the application."