The London-based Bahrain Institute for Rights and Democracy (BIRD) said in a statement that the Court of Cassation's ruling was the last level of appeal in a case that began in mid-2016 when Rajab was arrested over tweets suggesting that security forces had tortured detainees in a prison.
"Today's decision ended the legal remedy of a long-running, unfair trial," BIRD said in a statement.
Rajab, a leading figure in pro-democracy protests that swept Bahrain in 2011, was convicted last year of making "false or malicious" statements about authorities in Bahrain.
The charges arose from a January 2015 interview cited by the prosecution, in which he was alleged to have said that Bahrain was holding political prisoners who were subject to torture.
Amnesty International called Rajab's imprisonment "a flagrant violation of human rights, and an alarming sign that the Bahraini authorities will go to any length to silence criticism".
The UN human rights office last year called on Bahrain to "unconditionally and immediately" release Rajab.
BIRD said Rajab, who underwent surgery for a bleeding ulcer last year, faces up to 15 years in jail over a second hearing related to comments he is alleged to have made on Twitter. A verdict is expected on February 21.