Ontario's Court of Appeal refused their request.
The three-judge panel unanimously said it sees no legal reason to overturn a lower court ruling that the case should proceed.
Ontario launched a lawsuit against 14 tobacco companies in September 2009 to try to recoup past and present health-care costs related to smoking.
The province claims the corporations should be on the hook for billions of dollars because they misrepresented the risks of smoking, did not take steps to reduce the effects and marketed cigarettes toward children and teens.
The tobacco companies argued that Barbara Ann Conway of the Ontario Superior Court of Justice erred in concluding she had jurisdiction to hear the case.
"We are not persuaded that any of the appellants have demonstrated such error," the appeals court wrote in a 43-page ruling.
The Ontario government issued a statement saying it was pleased with the court decision.
The tobacco companies include four large multinationals, three of which include Canadian manufacturers. They are BAT Group (which includes Imperial Tobacco Canada Ltd.); Rothmans Group (Rothmans, Benson & Hedges Inc. and Rothmans Inc.); RJR Group (JTI-Macdonald Corp. and Macdonald Tobacco Inc.); and the Philip Morris Group.
They claim Ontario's lawsuit is based on a false theory that the companies conspired in the 1950s to withhold information from Ontario smokers about the harmful and addictive ingredients in cigarettes.
The companies contend there is no evidence that a conspiracy ever took place or that they specifically targeted Ontario. British American Tobacco notes it did not even exist until 1997.
None of the allegations have been proven in court.
The Ontario government says smoking is the leading cause of premature deaths and illness in the province and costs the health-care system $1.6 billion a year.
Every province except Nova Scotia has filed similar lawsuits.
Foreign parent companies tried to have themselves removed from the lawsuits in British Columbia and New Brunswick, but both courts turned them down and the Supreme Court of Canada denied the companies' requests to appeal.
In the United States, such lawsuits have resulted in huge out-of-court settlements of at least US$206 billion over 25 years.