The Yorke Arms, which held a Michelin star for 16 years up to October 2019, will remain closed indefinitely, with the business instead reopening as a private hire country house.
The 17-bedroom property, located in Ramsgill in the Yorkshire Dales, was "not financially viable" to reopen as a restaurant while following government guidelines around Covid-19.
Owner Jonathan Turner said: "The Yorke Arms has been a hostelry for over 100 years and the team are excited to move forward and ensure that legacy evolves and stays alive.
"Yes, these are challenging times for all, however we are determined not to let recent events prevent our guests from enjoying the enviable location and stunning interiors. This is Yorkshire. We pick ourselves up, dust ourselves down and move on".
The Yorke Arms lost its Michelin star in October 2019, but won a third AA Rosette a few months later in February 2020.
Head chef Frances Atkins, who has spent the past 22 years in the kitchens of the Yorke Arms, will continue to offer fine dining to guests, alongside more casual menus.
She said: "With Jonathan's entrepreneurial vision, the Yorke Arms will go from strength to strength. The comfort and atmosphere lends itself to the new offering and we need to continually adapt in uncertain times."