The New York State Court of Appeals ruled that the state may require haredi yeshivas to include core studies.
The decision was made by a majority of four judges to one who supported the original ruling in favor of the yeshivas.
In response, haredi educational institutions plan to appeal the decision in the New York Supreme Court.
The court decision allows the state to continue enforcing regulations that could require parents to remove their children from yeshivas that do not pass government inspections.
The court based its decision on the Felder Law from 2018, which gave the state the authority to determine which yeshivas meet legal requirements.
Nevertheless, the court ruled that the PEARLS organization representing haredim in the US and the yeshivas that joined the lawsuit have standing to file a lawsuit against the law.
Additionally, the court noted that the state's requirement to remove children from yeshivas is only a "recommendation" to parents.
The haredim hope that this determination can be used to limit state actions against parents who continue to send their children to institutions that are deemed illegal.
Rabbi Chaim Dovid Zwiebel, leader of Agudath Israel of America and CEO of PEARLS, said: "We are disappointed with the decision, but determined to continue the legal struggle to protect the educational rights of our community. We believe that ultimately, justice will prevail."