The Kangaroo Valley Folk Festival doesn't kick off until October, but current restrictions on large gatherings have cast uncertainty over the event.
Festival director Stuart Leslie says organisers hope for the best-case scanraio.
"Day to do things keep getting worse, but at the moment we're going ahead as if it is," he said.
"Hundreds of performers have applied and we've accepted several already.
""We hope that we can continue and have the first Folk Festival at the start of sping."
While Mr Leslie acknowledged a number of events had been caught out by the sudden changes, he said the Kangaroo Valley Folk Festival was in a very different position.
"They would have already spent a lot of money and at least we're not in that situation," he said.
"We can be fairly relaxed about it at this point, and we will go ahead if we can is the bottom line.
"We wouldn't be making a decision for another three months yet. "