Israel Folau's contract has been terminated after an independent panel ruled that Rugby Australia (RA) was right to let him go over a social media post in which he said "hell awaits" gay people.
The Australian rugby star and practising Christian was stood down by the RA in April over the controversial Instagram post but appealed the decision.
The panel considering his case upheld RA's decision to dismiss the Waratahs full-back after finding him guilty of a "high level breach" of the player code of conduct.
The image posted by Folau to Instagram stated: "Drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolators - Hell awaits you."
Folau has 72 hours to appeal the decision. He could also challenge it in the Supreme Court.
Commenting on Folau's dismissal, RA chief executive Raelene Castle said it had been an "extremely challenging period" for Australian rugby.
"This outcome is a painful situation for the game," she said.
"Rugby Australia did not choose to be in the situation, but Rugby Australia's position remains that Israel, through his actions, left us with no choice but to pursue the course of action resulting in today's outcome."
She added that RA needed to send the "clear message" for all rugby fans "that we need to stand by our values and the qualities of inclusion, passion, integrity, discipline, respect and teamwork".
Folau's post has split opinion far beyond Australia after English rugby player Billy Vunipola was given an official warning by the Rugby Football Union "for conduct prejudicial to the interests of the union or the game" after he defended Folau's comments on social media.
The RFU issued a statement after a meeting with Vunipola stating: "During the meeting the player expressed genuine regret at his public comments and understood that he had caused hurt and offence as a result of his actions.
"He has been reminded of his responsibilities as an England player and as an ambassador for the game, which values inclusivity and respect."
While the furore has played out in the media, Folau has expressed his resoluteness to follow his beliefs over his rugby career in recent church sermons.
"There have been many opportunities to potentially make the situation a little bit easier," he told his congregation in Sydney.
"I could go back and play the game, get everything back to the way it used to be.
"The way Satan works is he offers you stuff that could look good to the eye and makes you feel comfortable, and if you go down that path all the worries and troubles will go away.
"It is always the will of God that comes first."
Sydney's Daily Telegraph newspaper reported last week that Folau had rejected the offer of a A$1m (£540,000) settlement from RA to walk away from his four-year contract.
Many Christians have supported Folau's stance.
Rod Dreher, author of the Benedict Option, tweeted: "Israel Folau has been sacked. His career was destroyed by Aussie rugby officials because he tweeted a Scripture verse that violated secular liberalism's blasphemy code. He will not be the last. But he stands unbowed. Brave, brave man."
Laurence Wilkinson, legal counsel at ADF International, an organisation defending religious freedom, said that although Folau could have expressed his views "in a more sensitive manner", sacking him for it was an "absolute travesty for freedom of expression in sport".
"To suggest that the removal of Folau is in the pursuit of 'tolerance and respect' makes a mockery of the terms, and as some of Folau's teammates have already noted, it sends out a chilling message to all those who share his views," he wrote in the Spectator.
"If Rugby Australia's management genuinely wants the sport to be 'inclusive for all', it needs to start by including players that it disagrees with."
Wilkinson was not the only Christian to comment on the tone of Folau's post.
Brian Houston, senior pastor of the Sydney-based Hillsong Church, wrote in the Sydney Morning Herald that the Folau's comments had been "harsh" and could have the effect of putting people off the Christian faith.
"In 40 years of telling people about the good news of Jesus, I have seen that the 'turn or burn', approach to proclaiming the message of Christianity alienates people. Scaring people doesn't draw them into the love of Jesus," he said.
He added, "The world doesn't need more judgmental Christians."