French Prime Minister Manuel Valls hailed the ruling following years of legal battles and sometimes violent protests over the plan, saying it "proves once more that the project is perfectly legal and complies with current regulations".
But an umbrella grouping of activists vowed that they would "not allow any work or evictions to begin" for the Notre-Dame-des-Landes airport, which will be a second facility serving the western city of Nantes.
Yannick Jadot, a former Greenpeace activist who is the green party EELV's candidate in France's presidential elections next year, criticised the ruling, calling the project "absurd and destructive".
Between 200 and 300 activists are camped at the site some 20 kilometres north of Nantes in a protest that dates to 1965 when the project, now projected to cost nearly one billion euros was first mooted.
It was approved in 1970, but mothballed because of the oil crisis.
Since Socialist prime minister Lionel Jospin revived the plan in 2000, it has been the subject of heated public debate and dozens of legal challenges. Dairy farmers resisted eviction, while environmentalists said the project threatened important wetland supporting dozens of protected species of birds as well as newts and voles.
In June this year, voters in the Loire-Atlantique region approved the project in a referendum, the "Yes" vote winning with 55 percent.
The court said planned steps to compensate for the environmental impact of the project were adequate, and that the alternative of overhauling an existing airport serving the region, Nantes-Atlantique, was not viable.
"It's a huge disappointment," said local activist Francoise Verchere, the former left-wing mayor of Bouguenais, where the Nantes-Atlantique airport is located. "The fight continues."
Opponents of the airport can still lodge an appeal to France's highest court, the Conseil d'Etat, but one of their lawyers, Thomas Dubreuil, said it would be based "only on legal issues" that would not derail the project.
- with AFP