One of the plaintiffs, Cheng Chen Tao, 83, said she was outraged by the ruling, with lawyers for the group saying they planned to appeal to the Supreme Court.
"The ruling ridicules us. (The proceedings) ended without allowing us to speak," Cheng told reporters as she wept openly after the decision.
"Even if we lose the court case, my heart will not give up," she said.
The women claimed that they were victims of systematic sex abuse by the Japanese Imperial Army and that they suffered discrimination after the war.
They were taken to the front line during the war with promises of jobs there, according to court documents.
Japanese soldiers, however, used them as sex slaves, the women claimed.
The plaintiffs had demanded 10 million yen (80,300 US dollars) each in damages and an official apology from the Japanese government.
Judge Yoshinori Ishikawa rejected their claim saying wartime compensation issues had been settled by international and bilateral treaties since the end of the war.
It was the second judicial defeat for the women, who were appealing an identical ruling by the Tokyo District Court handed down in October 2002.
Originally, the case started with nine plaintiffs, but two of them died while the district court was handling the case.
Kevin Liao, the president of the Taipei Women's Rescue Foundation who accompanied the plaintiffs to Tokyo, said the group was considering taking the case to an international tribunal or courts in other countries if they eventually fail to win in Japan, according to Kyodo News.
The foundation has been supporting Taiwanese victims in the so-called "comfort women" issue for 11 years, Kyodo said.
More than 50 damages suits have been filed against Japan over its wartime sexual enslavement of women, mainly from South Korea and China.
Japanese courts have said a 20-year period for demanding compensation had expired or that internationally recognised treaties provide for reparations to be made to states, not individuals.
Historians say at least 200,000 young women, mostly Korean but also from Taiwan, China, the Philippines and Indonesia, were forced to serve as sex slaves in Japanese army brothels during the war.
At least 20,000 Taiwanese women were forced to work in brothels.
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