بالمهرجان في حفلة موسيقية.

It breaks down as:

• بـ = in / at / by
• الـ = the
• مهرجان = festival

So بالمهرجان means at the festival or in the festival.

In pronunciation, بـ + الـ usually merges, so it sounds like bil-mahrajān.

Both can work, but they feel a little different.

• بالمهرجان is very natural in Levantine for at the festival
• في المهرجان is also possible, and can sound a bit more literal or more formal, depending on context

With events, Arabic often uses بـ in places where English uses at. So بالمهرجان is a very normal choice.

Yes, في often means in, but in Levantine it also commonly means there is / there are.

So in this sentence, في is not really the preposition in. It is the existential there is.

That means the structure is basically:

• بالمهرجان = at the festival
• في = there is
• حفلة موسيقية = a concert / musical event

So the sentence works like: At the festival, there is a concert.

Because Arabic often leaves out the present-tense verb to be.

In English, you need is in a sentence like There is a concert. In Levantine Arabic, في often does that job by itself.

So you do not need a separate word for is here.

• حفلة can mean party, event, show, or concert
• موسيقية means musical

Together, حفلة موسيقية means a musical event, and in many contexts the most natural English translation is a concert.

So even though حفلة by itself does not always mean concert, the phrase حفلة موسيقية often does.

Because it has to agree with حفلة.

• حفلة is a feminine singular noun
• So the adjective must also be feminine singular

That is why you get:

• حفلة موسيقية

and not:

• حفلة موسيقي

Arabic adjectives normally match the noun in gender and number.

Because they play different roles in the sentence.

• المهرجان = the festival → a specific festival
• حفلة موسيقية = a concert → one concert being introduced

This is very normal. English does the same thing:

• At the festival, there is a concert

If you wanted to say the concert, you would make it definite too:

• الحفلة الموسيقية

Yes, it is natural. Starting with بالمهرجان puts the location first, like saying:

At the festival, there’s a concert.

You could also hear other orders, such as:

• في حفلة موسيقية بالمهرجان
• في المهرجان حفلة موسيقية in a more formal or standard style

The meaning stays close, but the emphasis shifts a little.
Starting with بالمهرجان gives extra focus to the location.

A common pronunciation would be:

bil-mahrajān fī ḥafle mūsīʾiyye
or
bil-mahrajān fī ḥafle mūsīqiyye

A few useful notes:

• بالمهرجان sounds like bil-mahrajān
• حفلة is often pronounced ḥafle
• The ة at the end of حفلة is usually pronounced like -e in Levantine speech

The vocabulary itself is widely understandable, but the use of في as there is is especially common in spoken dialects, including Levantine.

So this sentence feels natural in everyday Levantine-style speech.

In more formal Standard Arabic, you might more often see something like:

• في المهرجان حفلة موسيقية
• توجد حفلة موسيقية في المهرجان

So a learner should recognize that the sentence is very understandable, but the existential في is a strongly spoken-Arabic feature.