Defense lawyers said Richard Williamson was innocent because his comment denying the gas chambers aired on Swedish TV, where "Holocaust denial" is not illegal.
The European Court of Human Rights ruled that Germany was within its rights to convict British bishop Richard Williamson of "Holocaust denial".
Williamson, 78, sparked Jewish outcry in 2009 by denying that the Germans used gas chambers during World War II.
His lawyers tried to argue he should not had been convicted because the comment was made during a television interview broadcast in Sweden, where Holocaust denial is not illegal.
But the interview was recorded in Germany, where it is a criminal offense to dispute historical events during World War II.
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Williamson was convicted of "incitement to hatred" and ordered to pay a 12,000-euro fine, which was reduced to 1,800 euros ($2,100) in 2013 after a series of legal challenges.
The European court said it found no reason to disagree with the German ruling that Williamson’s "denial and downplaying of the genocide perpetrated against the Jews had disparaged the dignity of the Jewish victims".
It pointed out that Williamson knew his comments were illegal in Germany, and confirmed that since the interview was recorded there it was legal to prosecute the case in the country.
He did not seek to make special arrangements to ensure that the interview would not be available beyond Sweden, and would have been aware that it would have been accessible elsewhere via satellite TV and the internet, it agreed.
Williamson was formerly a member of the ultra-conservative Society of Saint Pius X but was kicked out in 2012 for disobeying orders from his superiors.
He was excommunicated by the Vatican in 1988 after he was ordained by a fundamentalist archbishop against papal orders.
He was allowed back into the Church in 2009 as part of a move by then pope Benedict to heal a rift between the Vatican and fundamentalists.
That decision came days after the airing of Williamson’s Holocaust-denying Swedish interview.