A customer services official for Dobbies Garden Centres, which owns the site, confirmed the attraction at Melville Nursery in Lasswade will not reopen.
Bosses said that they took the “difficult decision” to shut its doors permanently, following a review of their future.
The attraction, which opened in 1984, is understood to be the world's longest running indoor butterfly house.
It’s home to many reptiles, animals, butterflies, bugs and beasties, plus a gift shop and outdoor play area.
After garden centres reopened in August, the Lasswade attraction welcomed customers back temporarily for pre-booked visits but has remained shut since the last lockdown.
But in an email to the relative of a staff member, the CEO of Dobbies confirmed that “exceptionally challenging circumstances” during the pandemic have forced them to close their doors permanently.
Mhairi Whyte, whose son Alex volunteered for more than a year at the site, said staff and volunteers are devastated.
The mum from Loanhead is appealing for people to come forward to help her raise cash to save the attraction.
She said: “We are gutted. Alex hoped to work there one day. It was the world to him. He is so into the animals and looking after them that he now collects reptiles and we have four tanks at home.
"That has been what kept him going throughout these long hard months of lockdowns. It’s a devastating loss for so many.
"They saved Gorgie Farm. If they can tell us how much we’d need to raise to save it then I’ll do whatever I can to help.”
Dobbies has been contacted for comment.
Midlothian MP Owen Thompson has written to the managing director of Dobbies who owns the site, seeking a meeting to discuss the decision and help find a solution so the important attraction can remain open.
Mr Thompson said: "This is terrible news. I know we face very difficult times but this is an important educational resource for the community and brings many visitors to Midlothian. We can't let the world's longest running indoor butterfly house become a permanent victim of Covid cuts.
"Like many who grew up in Midlothian, Butterfly and Insect World was a big part of my childhood and it is still very much enjoyed by families now.
"At a time when we need to raise awareness of the natural world, it sends the wrong signal to lose a resource like this, which we are so lucky to have on our doorstep.
"I have asked for a meeting with the CEO of Dobbies as a first step to see what can be done. I know the local community won't let this go without a fight and I will be with them all the way. "