The case was brought to the court by a 24 year-old French woman, who has requested anonymity, with the help of a British legal team.
The woman, who used only her initials S.A.S., said she was the victim of discrimination since the burqa ban law was introduced in France in 2010.
But the European court rejected her arguments, and ruled that France was justified in introducing the ban in the interest of social cohesion.
"The court emphasised that respect for the conditions of living together was a legitimate aim for the measure at issue" a court statement said.
The Muslim Pakistani-born French woman argued that being obliged to take off her veil in public was degrading.
Two out of the 17 judges deliberating on the case dissented while the majority agreed unanimously that she had not been the victim of discrimination under the French ban.
The court decision is final.
This comes a few days after that the French Court of appeal upheld the decision of a childcare centre to fire an employee for wearing the Islamic headscarf.
Under the ban, women wearing full-face veils in public spaces can be fined up to 150 euros.