The Clean Train Coalition was seeking a judicial review.
On Wednesday the Ontario Divisional Court turned the group down and ordered the CTC to pay $30,000 in court costs.
In a statement Metrolinx said it welcomed the court's ruling but at the same time said it intends to "work closely with the community to move forward on building the most efficient air-rail link for the region."
The CTC is pushing for an electrified rail link from Pearson to Union station.
Metrolinx said it hopes, in the future to run an electric air-rail link. In the meantime, it said it intends to "provide the cleanest passenger diesel trains available in Canada."
The rail link is supposed to be in place for the Pan Am Games in 2015.