BBC Sport are reporting the Court of Arbritation in Sport (CAS) have thrown out Palace's appeal against UEFA's ruling.
CAS's ruling also sees Nottingham Forest's place in the Europa League confirmed - the two Premier League clubs effectively swapping places.
UEFA blocked FA Cup winners Palace from taking a place in the Europa League over their multi-club ownership rule with Olympique Lyon also qualifying for the competition.
American John Textor is owner of Lyon and also held a 43 per cent stake in Palace before selling his shareholding to Woody Johnson last month.
For UEFA, Textor's move to sell came too late for Palace, despite the American now having no ties with the club ahead of their Europa League campaign kicking off.
The decision by CAS has been softened, however, with Palace winning the Community Shield on Sunday against Liverpool.
CAS statement
In a statement confirming the verdict, the CAS wrote: "After considering the evidence, the Panel found that John Textor, founder of Eagle Football Holdings, had shares in CPFC and OL and was a board member with decisive influence over both clubs at the time of Uefa's assessment date.
"The Panel also dismissed the argument by CPFC that they received unfair treatment in comparison to Nottingham Forest and OL.
"The Panel considered that the UEFA Regulations are clear and do not provide flexibility to clubs that are non-compliant on the assessment date, as CPFC claimed."