The decision came in a ruling by the Enlarged Board of Appeal of the EPO on an application for "primate embryonic stem cells" made by the Wisconsin Alumni Research Federation (WARF) in 1995.
The Enlarged Board said that Rule 28(c) of the European Patent Convention bars the patenting of claims for products that "could be prepared exclusively by a method which necessarily involved the destruction of the human embryos from which the said products are derived".
It added that this bar remained "even if the said method is not part of the claims".
The Board confirmed that Rule 28 (which implemented the EU Biotech Directive) also applies to applications made before it came into force in 1999.
It found that the stem cells in the WARF application, which were developed by scientist James Thomson, cannot be produced without the use and destruction of human embryos.
But it added that the decision does not mean that stem cells themselves are not patentable, leaving uncertainty for the biotechnology industry.
The Enlarged Board also rejected WARF's argument that the European Court of Justice should hear the case.
The Board received 162 amicus briefs in the case, which arose after the application was refused by an examiner in July 2004. The questions were referred to the Enlarged Board by a Technical Board of Appeal in late 2005.
Similar WARF patent applications have also been challenged in the US.