The supermarket giant was refused planning permission for the store and 79 flats after it faced stiff opposition from both the local community and the secretary of state for communities and local government, Ruth Kelly.
Kelly argued that the store would be out of keeping with Highams Park's Victorian architecture, and that it would be too big. Residents and businesses said that the store would have damaged local traders, and create heavy congestion.
Tesco said it was "disappointed" by the decision.
Meanwhile, residents in the small Hertfordshire village of Cuffley, where Tesco chief executive Sir Terry Leahy lives, are mounting their own campaign against a store opening there.
Just under 2,500 local residents have opposed the plan to build a small Tesco store on the site of a former pub.