The International Criminal Court on Thursday rejected Tripoli's request to suspend the handover of slain leader Moamer Kadhafi's son Seif al-Islam.
"The Appeals Chamber... rejected the Libyan authorities' request to suspend the surrender...," the Hague-based court's appeal judges said in a statement.
They added that Tripoli remained "obliged" to hand over Seif al-Islam, 40, who served as the late Libyan strongman's de facto prime minister.
Tripoli's lawyers last month had asked the ICC, the world's only permanent court to try war crimes, to suspend an order to hand him over.
Tripoli and the ICC have been involved in a legal tug-of-war over where Seif al-Islam and Kadhafi's former spy chief Abdullah Senussi should face trial for their roles in trying to put down Libya's bloody revolt in 2011.
Mandated by the United Nations, the ICC's prosecutors investigated the conflict and in June that year issued arrest warrants against Kadhafi, his son and Senussi for war crimes and crimes against humanity.
The warrant against Moamer Kadhafi was cancelled after he was slain by rebel forces in October 2011.
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Last month, Libyan prosecutors said that Seif al-Islam and other former top regime officials, who also include Senussi, are to go on trial in Libya in August.
However, Seif al-Islam is still being held by a brigade of former rebel fighters in Zintan, 180 kilometres (110 miles) southwest of Tripoli, since his capture in November 2011.
His ICC-appointed lawyer John Jones on Thursday called on Tripoli to hand Seif al-Islam over to the ICC.
"The ICC has spoken today, clearly and categorically, regarding Libya's duty to immediately surrender Mr (Seif al-Islam) Kadhafi to the ICC's custody," he said in a statement.
"The defence calls on the members of the United Nations and the international community to make it clear to Libya that its defiance of the ICC's order for the delivery of Mr Kadhafi to The Hague will not be tolerated."
But Ahmed Jehani, Libya's representative to the ICC, said Tripoli "will again appeal the ICC decision as soon as Seif al-Islam is transferred" to the capital.
"The ICC decision is based on Seif al-Islam's detention in Zintan and not under the control of the judicial authorities in Tripoli," he said.
"This (ICC) decision is not final. Libya's right to try Seif al-Islam is linked to his transfer to Tripoli," Jehani said.