The original plans were led by US businessman Todd Warnock and secured planning permission from Highland Council, before Scottish ministers called in the planning application for further scrutiny.
Following a public inquiry, the government refused permission.
In their decision, Scottish ministers said the plan would have supported economic growth and rural development.
But they agreed with government-appointed planning officials’ findings that the golf course would have “significant” effects on rare plant life, wintering and breeding birds and the the dunes themselves.
The government said the “likely detriment to natural heritage is not outweighed by the socio-economic benefits of the proposal”.
Gordon Sutherland, of C4C, said the project team had studied other golf courses located in SSSIs, such as Askernish in South Uist, Machrihanish in Argyll and Skibo in Sutherland.
Mr Sutherland said: “Our aim remains to achieve planning permission for one of the world’s most environmentally sensitive golf courses and use the income it generates to remediate the Coul Links SSSI and then sustain it for future generations.”
