The people of the Chagos Islands sought the right to return there. But the court said they forfeited their right to a human rights case because they received financial compensation from the British government more than 20 years ago, The Daily Telegraph reported.
With Thursday's ruling, the islanders appear to have run out of legal options. The British Foreign Office said it is considering the resettlement issue.
The Chagos Archipelago, a British territory, is a group of seven atolls and more than 60 islands. In the 1970s, after Britain secretly allowed the United States to build an air base on the largest island, Diego Garcia, the 1,500 residents were deported.
The former islanders ended up living in a number of places, including Mauritius, the Seychelles and Sussex in England.
"We welcome the end of this legal process, which has taken many years," the Foreign Office said in a statement. "We have made clear our regret for the wrongs done to the Chagossian people over 40 years ago. Nevertheless, it was right for the government to defend itself against this action."