The project, costing around £6 million, was planned for the dunes at Coul Links at Embo, near Dornoch.
The course was set to cover 22.7 hectares in total, with 14 hectares on sensitive coastal habitat.
Highlands councillors initially gave the plans the green light last June despite more than 1,800 objections and a recommendation for rejection from the local authority’s own planners.
But following a public inquiry, the Scottish Government has refused permission.
They did say the plan would have supported economic growth and rural development.
But the "likely detriment to natural heritage is not outweighed by the socio-economic benefits of the proposal".
Chief Executive Jo Pike said: “We are delighted with the Scottish Government’s decision to save Coul Links.
"I would like to say a huge thank you to every one of the thousands of people from across Scotland and beyond who added their voice to our campaign.
"Today’s decision demonstrates that individuals can make a real difference by taking the time to stand up for nature."
American developers Todd Warnock and golf course mogul Mike Keiser were behind the project.
They promised the new site would generate 250 jobs and bring in £60 million for the local economy in its first ten years of operation.
Despite some support from local businesses, environmentalists fought hard to prevent the plans highlighting the the potential risks to rare species and habitats including RSPB Scotland, the National Trust for Scotland and Scottish Wildlife Trust.