Planning permission has been denied for a proposal to build 247 homes.
Barratt had submitted its plans for the development at Fourdoun Road in Laurencekirk.
But councillors on the Kincardine and Mearns area committee voted against the scheme.
Douglas McLeod, regional managing director for Barratt Developments in Scotland, said: “We are very disappointed with the committee’s decision, especially in light of the current housing demand for affordable and private homes … which this application sought to address.
“We will wait for the decision notice to be issued and then review our position.”