Travelsure, which operates the T01 service, which links the village with Alnwick and Amble, has given formal notice of the proposal.
However, the company has revealed that discussions are continuing with Northumberland County Council to come up with an alternative solution.
A Travelsure spokesperson said: “We have run the service for four years but it's been non-profit-making right from the start.
"We’re trying to put on a reduced service and looking at the possibility of a tendered service from the end of July or early August.
"We know it’s a needed service.”
The route is not currently subsidised by the council.
Beech Estate resident Nancy Berry said: “This bus service is an absolute lifeline to me and many other elderly and disabled people living down the bottom end of Shilbottle.
"Like me, many residents are unable to walk the distance to St James's Church to use an alternative service in to Alnwick. I also use this service to go to the Post Office and chemist on Grange Road.
“Getting this bus in to Alnwick or through to Amble is the only way I can leave the house and see life going on.
"In this current climate… where ordinary people are experiencing food poverty, fuel poverty and general extortionate cost of living increases, public transport is a vital lifeline for many in order to access employment but also health care and food banks. There are also the environmental implications.”