The Badger Trust, supported by the rock star Brian May, had aimed to overturn an order by the Welsh assembly government for the cull to take place but a judge dismissed the charity's arguments.
May said he was disappointed but warned the battle would continue.
"This is a disappointment, of course," the Queen guitarist said. "But not just for thousands of innocent badgers. The irony is that it is ultimately a tragedy for farmers, too – the very farmers who have been pushing for badgers to be culled.