The NCAA's Committee on Academic Performance turned down the school's appeal after it earlier ruled Toledo wasn't in compliance due to the basketball team's past cumulative Academic Performance Rate scores.
Under a policy passed last year, the collegiate sports governing body uses a four-year APR average score of 900 and a two-year average of 930 as the cut-off point.
The Toledo team had an APR score of 869 for the four years from 2007-08 through 2010-11, and a 917 score for the two years from 2009-11.
"We question as to why our current student- athletes should be penalized next season without giving us a chance to use the most recent APR data from the 2011-12 school year," Toledo Athletic Director Mike O'Brien said.
In addition to the post-season ban, the program must reduce practice time and cut three regular-season games from its 2012-13 season.