Beirut Madinati emerged this year with the aim to take on traditional parties in the politically deadlocked country's first elections in six years.
The list of independents came in second with 32 percent of votes, according to results obtained by AFP, while 46 percent and all seats went to the Beiruti List supported by entrenched political parties.
Another 22 percent of votes went to two other lists.
Lebanon's political scene is sharply divided, with the government split roughly between a bloc led by Shiite movement Hezbollah and another headed by Sunni politician and former premier Saad Hariri.
The rival blocs however banded together to support the same list against Beirut Madinati in the capital.
Experts hailed Beirut Madinati's results as a victory on Tuesday despite it not winning any of the city council's 24 seats.
Analyst Rabee al-Haber said the civil society list's results were "not a failure because six parties allied against it".
"With a proportional system, it would have been represented on the new municipal council," the head of Statistics Lebanon said.
Under the current voting system, voters have as many votes as there are seats -- on different lists, if they choose -- and the candidates who win the highest number of votes win.
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If it had been a proportional representation system, voters would have chosen one list and each list would have received seats in proportion to their overall share of votes.
Abdo Saad, head of Beirut Center for Research and Information, said the results were a blow for traditional parties.
"It's a slap in the face of political parties and these parties will have to gently announce these bad results to their supporters," he said.
Online the grassroots list -- an unlikely alliance of citizens including teachers, artists and fishermen -- celebrated its achievements.
"Beirut Madinati pushed traditional parties to form an alliance and for the first time to actually put forward an electoral programme," it said on its Facebook page.
The "votes gave Beirut back trust in the electoral process and belief that there is an alternative to the traditional political class," it added.
Lebanon has been without a president since May 2014, when the mandate of Michel Sleiman expired, because the country's Christians, Sunni and Shiite Muslims and Druze cannot agree on a candidate.
The country has not voted for a parliament since 2009, with the legislature instead twice extending its own mandate.
Civil society in Lebanon gained momentum after protests last summer over the political crisis that saw garbage pile up on the streets.
Since the end of the Lebanese civil war in 1990, lists in the municipal polls every six years have traditionally been pulled together by a handful of parties often formed along sectarian lines and led by former warlords.