Trump, the frontrunner for the 2024 Republican presidential nomination, had sued Orbis Business Intelligence about claims in a dossier written by former British intelligence officer Christopher Steele, who co-founded Orbis.
Judge Karen Steyn ruled that the former U.S. president's case could not continue, saying in a written ruling that "there are no compelling reasons to allow the claim to proceed to trial".
Trump said in a witness statement made public in October that he brought the case to prove claims in the so-called Steele dossier, published by the BuzzFeed website in 2017, that he engaged in "perverted sexual acts" in Russia, are false.
Many of the allegations were never substantiated and lawyers for Trump, 77, said that the report is "egregiously inaccurate" and contained "numerous false, phoney or made-up allegations".
Orbis, however, argued that Trump brought the claim simply to address his "longstanding grievances" against the company and Steele.
The London lawsuit is just one of many legal cases involving Trump, who faces four separate criminal prosecutions in the United States.
(Reporting by Sam Tobin; Editing by Kate Holton)
