The home on North Cooper Street is advertised online as a club called Eutopia.
Neighbors complained about weekend traffic, parking and noise from late-night parties around the house.
"Our opinion, and everyone I've spoken to, is that we don't want it around," said Frank Jelinek, who lives nearby.
The city said parities often attracted around 200 people, and that the owners are violating several zoning restrictions.
"This isn't a morality issue for us, though. We're looking at this specific residence. It is a residence. It is a home. It should be used as that and not a business to the extent we found there at that residence," said Jay Warren, an Arlington spokesman.
The owners have 10 days to file an appeal with the city.
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