The court said the plans for a third runway had not taken account of the government's commitment to the Paris Climate Agreement.
The judges said that in future, a third runway could go ahead, as long as it fits with the UK's climate policy.
It's also thought the ruling could set a legal precedent - it's the first in the world to be based on the Paris Agreement, signed by 195 nations in 2016 to deal with greenhouse gas emissions.
Court of Appeal judge Justice Lindblom said the government has not asked for permission to appeal the decision, so that could well be the end for Heathrow's new bit of worldwide grade tarmac.
Mark Reynolds, group chief executive of Mace, said: "The government's decision not to appeal the ruling against Heathrow's expansion is disappointing".
"The argument has to be loud and clear that we're living in a climate emergency, and it must be no to all airport expansions", Polanski said, adding that other governments around the world could learn from the ruling.
Heathrow believes that a recently launched United Kingdom aviation industry plan to reach net-zero carbon emissions by 2050 will help it see the decision overturned. "Let's get Heathrow done".
Deputy Director of the Aviation Environment Federation (AEF), Cait Hewitt, said: "This is a huge win for the climate and leaves Heathrow's third runway plans in tatters".
The Secretary of State had argued that the Paris Agreement did not represent "Government Policy" as it was not incorporated into domestic law.
Britain pledges to bring all greenhouse gas emissions to net zero by 2050. The government is not appealing the ruling. "The government should stand up to the airports lobby, drop its support for airport expansion, and invest instead in low-carbon transport and supporting British tourism".
Under the 14 billion pound ($18.2-billion) expansion plan, Heathrow's new runway would open in 2028. Expansion's impact on our country's infrastructure is unparalleled and will considerably benefit every region of the UK.
The decision comes as part of marathon, QC-laden litigation over various aspects of Heathrow expansion. A spokesman for Johnson told reporters that Heathrow must still meet high environmental standards and demonstrate a "realistic" case for the project.
Mr Johnson, who as London mayor had supported an air-hub in the Thames estuary dubbed "Boris Island", insisted that expansion at Gatwick could boost the economy with less environmental damage than the Heathrow initiative.
Labour shadow transport secretary Andy McDonald said the ruling was a "victory" not just for campaigners but also for "the billions of people, including everyone in this country, who could be affected terribly by climate change".
"The basic question before us", the judges added, "is an entirely legal question".
Tony Travers, an expert on London issues at the London School of Economics, pointed out that the debate over Heathrow has been going on intermittently since the 1960s and choosing another option to expand airport capacity would take years.
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