Lutz Battke appealed after he was dismissed as district master chimney sweep - a role which includes making public appearances - on the basis of his work for the far-right NPD party and active participation at right-wing rallies.
But the Federal Administrative Court in Leipzig told the 54-year-old on Wednesday that the state administrator in Saxony-Anhalt had the right to dismiss him from his public post because of his political activity.
Battke regularly attends memorial services for the assassins who murdered Jewish industrialist Walther Rathenau in 1922, and serves on Burgenland district council and the small town of Laucha in central Germany for the NPD.
His appeal was accepted by the lower courts on the grounds that his political activities bore no relation to his work.
But the Federal Administrative Court rejected this argument, ruling it was doubtful Battke could be relied upon to observe the German legal system and support the constitution. This was important in his position as district master chimney sweep, which the judges stressed included public duties.
The court said Battke's actions made clear he endorsed the most serious and anti-Semitic crimes to the point where he felt the perpetrators worthy of veneration. The court found this compromised his position as part of the administration and his obligation to protect the rights of his customers.
He lost his position as trainer of the youth football team in Laucha in 2010 due to his political activities.