The nucleation rate from classical nucleation theory is independent of sample size. In the past decades, several experimental and theoretical studies argued that the homogeneous nucleation rate of ice in supercooled droplets increases when the drop size is decreased. In this paper, we investigate the nucleation of ice in nanoscale water films using molecular dynamics simulations. We found that the nucleation rate of ice actually decreases when the film thickness decreases in the nanoscale regime. A theoretical model is presented to interpret the mechanism of nucleation rate decrease, which agrees well with the simulation results. The model divides films into the near-surface and the middle regions that are characterized by relatively low and high nucleation rates, respectively. The middle region dominates the nucleation process of films, whereas its effect is continuously weakened when increasing volume fraction of the near-surface region by decreasing the film size, leading to a decrease of the total nucleation rate. The structural and thermodynamic analyses indicate that the high stress induced by the surface layering slows down the diffusion and increases the nucleation barrier in the near-surface region, which is responsible for the low nucleation rate and eventually the decrease of the total nucleation rate.