The court said the issue involves state sovereignty, which falls under the president's responsibilities, and the court therefore has no jurisdiction over the suit.
Al-Masry al-Youm said the plaintiffs in the case argued that Egypt should cancel its peace deal with the Jewish state over its destruction of Islamic holy sites and its refusal to stop building settlements in Palestinian territories.
The court threw out a similar case in October, al-Masry al-Youm said.
A Freedom and Justice Party representative said the party is working on amending the peace treaty with Israel and will send a new draft law to President Mohamed Morsi.
The 1979 peace treaty bans Egypt from sending armed troops into the Sinai peninsula and allows only Egyptian police with light weapons to guard the boarders, al-Masry al-Youm reported.
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Syrian Al Qaida group executes Lebanese soldier