"Due to the nature and seriousness of the terrorist acts committed... the punishment of the stripping of nationality was not disproportionate," said the State Council in its ruling.
The five dual-nationality citizens involved were sentenced in France in 2007 for their role in a series of bombings in Casablanca, Morocco, in 2003 that left 45 dead.
Four of the men hold dual Moroccan nationality and the fifth dual Turkish nationality, and the ruling means they can now be deported to their country of origin.
French Interior Minister Bernard Cazeneuve requested in parliament last October that the men be stripped of their nationality.
French law only allows nationality to be removed from a citizen who holds a second passport and such cases are rare.
The interior minister said at the time that only one French person had been stripped of their citizenship since 2007, a jihadist with joint Moroccan citizenship who had his passport taken away in September.
France has stepped up the battle against jihadists since two major attacks in 2015 left 147 people dead.
After Islamic State gunmen and bombers attacked Paris in November, President Francois Hollande tried to change the constitution to strip all convicted terrorists of their nationality.
The reform sparked a fierce debate over the risk that it would create stateless persons, and even led to the resignation of justice minister Christiane Taubira who opposed the measure.
Hollande was eventually forced to scrap the plan in an embarrassing blow to his already beleaguered government.
The lawyers for the five men who lost their French citizenship argued that the decision amounted to a "double sentencing" and that if their clients were expelled from France they faced torture in their home countries.