George Pell, Pope Francis' former finance minister, was found guilty of molesting two 13-year-old choirboys in Melbourne's St. Patrick's Cathedral in 1996 and 1997 last December.
The Victoria state Court of Appeal rejected Pell's appeal by 2-1 on Wednesday.
At the time of the offending, Pell had just become archbishop of Australia's second largest city and had set up a world-first compensation arrangement for victims of clergy sexual abuse.
His lawyers are expected to appeal the decision in the High Court, Australia's final arbiter.
Australian Prime Minister Scott Morrison said Cardinal George Pell will be stripped of his Order of Australia honour after he lost his court appeal.
Pell was sentenced to six years in prison in March and was ordered to serve a minimum of three years and eight months before he will be eligible for parole.
His lawyers are expected to appeal the decision in the High Court.
The victim who testified that Pell molested him as a choirboy in the 1990s says he is relieved the disgraced cardinal's appeal against convictions has failed and hopes the legal process has ended.
The man, who cannot be named, said in a statement the criminal process since he reported Pell to police four years ago has been "stressful".
The victim said he has not asked for compensation and the case has never been about money.
A statement from Pell's spokeswoman said the lawyers will examine the judgement and consider further appeal.
It said he maintains his innocence and added: "Cardinal Pell is obviously disappointed with the decision today".
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