The world number one learned on Sunday that his second appeal to reinstate his visa had been rejected unanimously by three judges at the Federal Court in Melbourne.
Djokovic, who is not vaccinated against COVID-19, had been due to begin his latest title defence against Miomir Kecmanovic on Tuesday (AEDT) but will instead now be deported from the country.
While disappointed at the decision, the 20-time grand slam winner will cooperate with the authorities in relation to his departure from the country.
In a statement released shortly after the verdict, Djokovic said: "I will now be taking some time to rest and to recuperate, before making any further comments beyond this.
"I am extremely disappointed with the Court ruling to dismiss my application for judicial review of the Minister's decision to cancel my visa, which means I cannot stay in Australia and participate in the Australian Open.
"I respect the Court's ruling and I will cooperate with the relevant authorities in relation to my departure from the country."
Sunday's verdict looks set to bring an end to a long-running saga that began when Djokovic was held at an airport in Melbourne when he arrived in the country on January 6.
The 34-year-old won an appeal to overturn the first bid to deport him from the country, but immigration minister Alex Hawke used his powers to again cancel the visa on Friday.
That decision was taken amid much backlash in Australia, which has strict coronavirus restrictions, while some leading players have lamented how the tournament has been overshadowed by the Djokovic drama.
But after losing his latest appeal, the Serbian hopes that all focus can now be on the first grand slam of the year, which begins on Monday.
"I am uncomfortable that the focus of the past weeks has been on me and I hope that we can all now focus on the game and tournament I love," he said in his statement.
"I would like to wish the players, tournament officials, staff, volunteers and fans all the best for the tournament.
"Finally, I would like to thank my family, friends, team, supporters, fans and my fellow Serbians for your continued support. You have all been a great source of strength to me."
Full reasons for the court's ruling will be published "in the coming days".
Djokovic could now be banned from the country for the next three years as that is the punishment that usually comes with a deportation order.