In February, District Judge Quentin Purdy, at City of Westminster Magistrates' Court, ruled Bat Khurts should be sent to Germany.
Mr Bat, 41, is wanted for kidnapping a Mongolian national suspected of murdering a government official.
His appeal was rejected by the High Court on Friday.
The Mongolian government said it was "very disappointed" with the judgment.
It declined to appeal to the Supreme Court but said it would be "taking this matter to the International Court of Justice".
At the earlier hearing Mr Bat's lawyer claimed he was lured to the UK by the Foreign Office, on the pretence of attending high-level government talks on intelligence co-operation, so he could be arrested and extradited to Germany.
Lord Justice Moses and Mr Justice Foskett dismissed his appeal but his lawyers said the case may now be taken to the European Court of Human Rights.
'No evidence of luring'Lord Justice Moses said Mr Bat "has not established that he was lured into this country".
He said: "Far from being lured, at every stage when the government of Mongolia, particularly through its ambassador, attempted to arrange meetings, they were rebuffed."
Lord Justice Moses said they rejected the allegation that Mr Bat was tricked into coming to Britain and said there was "no question of any official in the United Kingdom luring the appellant to this country in the belief that he was going to meet United Kingdom officials to discuss security matters".
Mr Bat was allegedly involved in the 2003 kidnap of Enkhbat Damiran, who was taken from France to Berlin, drugged and flown to the Mongolian capital, Ulan Bator.
Mr Enkhbat was wanted in connection with the murder of Mongolia's Infrastructure Minister Zorig Sanjasuuren in 1998.
At the hearing earlier this year his lawyer, Alun Jones QC, claimed Mr Bat, head of the executive office of Mongolia's National Security Council, should not have been detained at Heathrow Airport in September because he was covered by diplomatic immunity.
He said Mr Bat had been granted a business visa for a visit during which he was supposed to meet Britain's National Security Adviser, Sir Peter Ricketts, and strategy and counter-terrorism director, William Nye.
Judge Purdy said he believed Mr Bat was invited for genuine security talks but the Serious Organised Crime Agency (Soca) had heard about it and were aware of the outstanding warrant from Germany.
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