The decision is a complication for Prime Minister Theresa May, who wanted to trigger Article 50 of the Lisbon Treaty -- the legal mechanism that begins the process of leaving the EU -- by the end of March. Doing so would open the door for EU negotiations, which are likely to last two years.
"To proceed otherwise would be breach of settled constitutional principles stretching back many centuries," Lord David Neuberger, president of the Supreme Court, said as he read out the ruling.
But the court decided that the UK government did not need the approval of devolved governments in Scotland, Northern Ireland and Wales to begin the negotiating process.
The government said it was disappointed by the ruling, but would abide by it.
May has promised lawmakers a vote on the outcome of the talks, but wanted to begin the process without a decision in parliament. The government must now introduce legislation to the House of Commons, which could delay May's timetable.
The government had appealed a November High Court decision and Supreme Court judges deliberated the case over four days in December before giving their verdict Tuesday.
Earlier, it was reported that the UK voted to leave the EU by 52% to 48% at a referendum on June 23. Leave won the majority of votes in England and Wales, while every council in Scotland saw Remain majorities. London, Scotland and Northern Ireland voted for remaining within the EU, while the rest of the United Kingdom said their 'no' to the Union. After the announcement of the results, Prime Minister David Cameron said he would resign by fall of this year. President of the European Council Donald Tusk stated the remaining 27 member countries of the European Union intended to keep their unity after the UK leaves the bloc.
Ukraine's Foreign Minister Pavlo Klimkin announced that regardless of the referendum outcomes, the UK will remain key friend and partner of Ukraine. President Petro Poroshenko also stressed his hopes that the results will not affect extension of sanctions against Russia.