Campaigners have fought to preserve the Grade II listed stepped structure at Butterley Reservoir at Marsden, near Huddersfield.
Yorkshire Water said the spillway had to be upgraded using concrete for safety reasons.
Critics favoured the creation of an overflow drop shaft and tunnel likened to a “giant plughole”.
Campaigner Diane Ellis said opponents were “absolutely elated” at the rejection.
A company spokesman said: “We are surprised and very concerned that the planning committee has refused our planning and listed building consent applications, especially because they were recommended for approval by
Kirklees’ own council officers, and English Heritage has not objected.
“We are already having to actively manage the volume of water held in the reservoir in the face of increased seasonal rainfall, and we need to upgrade the spillway because it plays a vital role in ensuring its safety by allowing water to flow from the reservoir when it is full.”
The plans were backed by an independent engineer and “it is wholly inappropriate to suggest that we would put profits before public safety,” the spokeswoman added.
An appeal was likely, she added.