The decision by the UN's cultural arm on Thursday was widely expected, but it will still sting a city proud of its architectural reputation.
The 20-kilometre stretch of the Elbe Valley, which includes Dresden's famed Baroque-style complex of palaces, churches and theatres in the city centre received the UNESCO world heritage status in 2004.
UNESCO put the site on its endangered list in 2006 after the city started to move forward with plans to build a new bridge near Dresden's centre.
City officials say the bridge is needed to reduce traffic congestion in the city and that plans for the bridge have existed in one form or another for a hundred years. Dresden's old city and new city are already connected by four bridges.
But UNESCO said the construction will irreparably cut off the Baroque centre with the Elbe's flood plains.
“It is more than regrettable that all parties could not find a compromise,” said German Culture Minister Bernd Neumann in a statement.
“I'm certain Dresden and the Free State of Saxony will remain aware of their responsibility to the unique cultural landscape – even if this no long can claim the proud title of world heritage.”