Lawyer Shang Baojun said the court in suburban Beijing's Huairou district turned down Liu Hui's appeal.
"We're very disappointed by this outcome," Shang told The Associated Press.
Liu Hui's sister, Liu Xia, has been under house arrest since her husband was awarded the Nobel prize in 2010. Shang said that Liu Xia, who has protested her extra-legal detention, did not attend Friday's hearing because she wasn't feeling well.
Foreign diplomats and journalists who sought to attend the trial were denied entry to the courthouse.
Liu Xiaobo's Nobel prize incensed China's leaders, who adamantly rejected his calls for sweeping changes to Beijing's one-party communist political system contained in a document titled called Charter '08.
A court dismissed his appeal in early 2010.
China also has retaliated against Norway, where the Nobel Peace Prize is awarded, freezing the country's diplomats out of meetings, halting trade talks, and blocking salmon imports.
Liu Hui's lawyers have said his dispute over a development deal in Beijing had already been resolved, with the disputed 3 million yuan ($500,000) handed over to partners in the transaction, before the case went to trial.