Nigeria international has been denied a work permit to play for English Championship side Birmingham City.
Birmingham had agreed terms with the 24-year-old to sign him from Turkish club Trabzonspor.
However the Football Association turned down a first application for a work permit for Onazi last week.
An appeal made by the club was rejected on Wednesday despite Onazi being a regular in the Nigeria national team.
BBC Sport learnt that the player and his representatives are bitterly disappointed that the panel rejected an appeal.
Onazi has played 38 times for the Super Eagles and helped them to win the 2013 Africa Cup of Nations and reach the last 16 of the World Cup in Brazil a year later.
However Nigeria's failure to qualify for the past two editions of the Nations Cup has affected his chances of securing a work permit to play in the English Championship.
Despite appearing in over 80% of the national team games, Onazi failed to earn a permit after the FA considered the West African nation's world ranking in the past two years.
They are ranked 38th in the August 2017 ranking, but Nigeria finished 54th on aggregate over the past two years.
Onazi joined current club Trabzonspor from Lazio last year and scored twice in 27 Turkish Super Lig matches last season.