Zuma and the National Prosecuting Authority (NPA) were appealing against the High Court ruling, made in April 2016.
South Africa's Supreme Court of Appeal on Friday upheld a High Court ruling to reinstate hundreds of corruption charges filed against Jacob Zuma before he became president.
"The conclusion of the court below that the decision to terminate the prosecution was irrational can not be faulted", judge Eric Leach said in his ruling delivered in Bloemfontein.
Charges were first brought against Zuma in 2005 but dropped by prosecutors in 2009.
In his decision to reject their appeal, Judge Lorimer Leach said it was "irrational" for the NPA to have set the charges aside. Zuma's counsel Kemp J Kemp SC hinted that their next move would be to approach the NPA to once again consider Zuma's representations.
"Let's take it a step further - in other words, they made an irrational decision?"
He said the picture that emerged was one in which Deputy National Director of Public Prosecutions Willie Hofmeyr and Mpshe were "straining to find justification" for discontinuing the prosecution.
Since then, the DA has challenged the matter in court.
Advocate Hilton Epstein, SC, for the NPA, faced tough questions at the time from the visibly unimpressed judges, who pressed him on who had decided on whether Zuma should be prosecuted or not.