In a ruling that could be appealed, the Oslo district court said the Norwegian state did not violate the constitution by granting exploration licenses in the Barents Sea in May 2016 to 13 companies, including the partially state-owned Statoil, US giants Chevron and ConocoPhillips, and Russia's Lukoil.
The groups Greenpeace, Natur og Ungdom (Nature and Youth) and the Grandparents Climate Campaign had accused Norway, western Europe's largest oil and gas producer, of violating a new article of the country's constitution that guarantees since 2014 the right to a healthy environment.
The environmentalists also argued that new oil activities in the fragile Arctic region would be contrary to the 2016 Paris climate accord, which seeks to limit average global warming to under two degrees Celsius (3.6 degrees Fahrenheit).
The Oslo court said Norway could not be held responsible for CO2 emissions caused by hydrocarbons which it exports to other countries.
"We are pleased that the court has given a clear meaning to the (constitution) article on the environment ... that can be used to stop harmful political decisions," Truls Gulowsen, leader for Greenpeace Norway, told AFP.
"At the same time, we are very disappointed that it has created a legal vacuum by claiming that emissions from Norwegian oil abroad are not covered by this provision of the constitution," he added.
A victory for the environmentalists would have had serious economic repercussions for Norway which owes its wealth to oil.
As oil production has been halved since 2000, Norway has turned its sights toward the far North: the Barents Sea holds 65 percent of the undiscovered reserves on the Norwegian continental shelf, according to the Norwegian Petroleum Directorate.
During the trial in November, the Norwegian state, which owns 67 percent of Statoil, claimed that the granting of exploration licenses was in accordance with the law.
The government's lawyer, Attorney General Fredrik Sejersted, described the environmentalists' lawsuit as a "show".
"Norway's oil policy is the business of the parliament, not the judicial system," Tommy Hansen, spokesman for the Norwegian Oil and Gas Association, said on Thursday.
"And this was an unanimous parliament, short of one vote, that adopted the 23rd cycle of oil concessions, so it has a solid political and democratic majority," he told AFP.
The plaintiffs will also have to pay 580,000 kroner (more than 59,000 euros) of legal costs for the state.
While the Norwegian state won the battle, the fate of the oil industry in the far North remains unclear.
Recent prospecting campaigns have shown disappointing results and the exploitation costs of any discoveries are expected to be high, pushing several big players to shy away from the region.
The Norway case illustrates how the battle against global warming is increasingly being fought in the courts.
The London-based Grantham Research Institute on Climate Change and the Environment has listed more than 260 climate-related cases in 25 jurisdictions, most of them during the past decade.
This figure excludes the United States where the number of such cases exceeds 700.
Judicial battles are sometimes successful.
The Netherlands was ordered in 2015 to reduce its greenhouse gas emissions by 25 percent by 2020, a decision that has been appealed.
In November, a German court also agreed to consider a lawsuit by a Peruvian peasant who wanted to force the energy giant RWE to compensate him over the effects of climate change in the Andes.