The university's board of governors met on Tuesday to vote on the issue. Many students and citizens attended to hear the results.
In the U.S, where the movement started, Harvard University also rejected a petition for divestment.
In Canada, students have campaigned for divestment at UBC, the University of Ottawa, the University of Toronto, and McGill.
One earth sciences student who spoke to the investment committee said divesting from fossil fuel investments would hurt program funding and increase expenses.
Dalhousie University holds more than $20 million in energy shares in its endowment fund. Governors were concerned that it could lose program funding from energy companies.
The board of governors said divestment would require dismantling the investment structure.