The Vatican rejected an appeal by Sister Lucy Kalappura, who was dismissed by the Franciscan Clarist Congregation (FCC) in the southern state of Kerala.
Sister Lucy believes her dismissal is linked to her participation in protests against a bishop accused of abuse last year, in which a group of nuns called for justice to be heard for the alleged victim.
Bishop Franco Mulakkal was later arrested accused repeatedly raping a nun over a period of two years.
The bishop denies the charges brought against him.
FCC has said Sister Lucy's dismissal was due to her lifestyle "violating" the "proper law" of the congregation.
Sister Lucy told the BBC she is unsatisfied with the Vatican's response to her appeal, after they allegedly did not give her side of the story a fair hearing.
She said: "I am not going to leave the convent. The lifestyle I lead is as per the rules and regulations."
Sister Lucy went on to say that she has no plans to make a further appeal to the Vatican but instead intends to take the matter to court.
"I am allowed a second appeal but I don't see any point in doing that since they have made up their mind. I will now go to court on behalf of all the people who are being suppressed and facing illegal behaviour from authorities of the congregation," she added.
The church in Kerala and the Vatican have been accused of overlooking the rape allegations against Bishop Mulakkal, after receiving a number of letters outlining concerns of the Bishop's behaviour.
Testifying in a local court, one nun said the Church was attempting to "sabotage" evidence in order to protect the bishop.