UEFA have confirmed they have rejected Sion's appeal against their expulsion from the Europa League, allowing Celtic to remain in the competition.
The Swiss club were thrown out of the tournament on September 2 after being found guilty of fielding ineligible players, with Celtic handed their place in the group stages despite losing the play-offs 3-1 on aggregate.
Sion vowed to fight their expulsion but have lost their appeal to be reinstated following Tuesday's hearing.
A UEFA statement confirmed: "THE UEFA Appeals Body today rejected FC Sion's appeal against their expulsion from the group stages of this season's Europa League."
Sion can take their case to the Court of Arbitration for Sport within 10 days of written receipt of the decision.
However, Celtic look set to face Atletico Madrid in Thursday night's opening game, despite Sion president Christian Constantin claiming his side also plan to travel to the Spanish capital.
UEFA's statement in full read: "The UEFA Appeals Body today dealt with the appeal lodged by FC Sion against the decision of the UEFA Control and Disciplinary Body of 02 September to forfeit their two UEFA Europa League play-off ties played against Celtic FC on 18 and 25 August.
"The Appeals Body heard the parties and decided to reject the appeal lodged by FC Sion, confirming that the Swiss club had fielded ineligible players in both ties.
"As a consequence, Celtic FC remain qualified for the UEFA Europa League group stage and will play against Club Atletico de Madrid on Thursday 15 September.
"An appeal against this decision can be lodged to the Court of Arbitration for Sport within ten days of receipt of the written grounds for the decisions."
Earlier on Tuesday, a Swiss regional court backed Sion's fight to be reinstated in the competition.
The UEFA statement added: "UEFA also received today on this matter a court decision from the Tribunal Cantonal de Vaud and will issue a statement in this respect at a later stage."
News of the ruling was welcomed by Celtic, who now face a tough challenge in the group stages.
A statement from the club read: "The UEFA Appeals Body today rejected FC Sion's appeal against their expulsion from the group stages of this season's Europa League.
"Celtic were reinstated to the competition, and will take on Atletico Madrid, Udinese and Rennes. The first match takes place this Thursday, September 15 at the Vicente Calderon Stadium in Madrid.
"Clearly, Celtic are pleased with the decision."