Chelsea will take their appeal against a two-window transfer ban to the Court of Arbitration for Sport after it was rejected by FIFA.
Football's world governing body have upheld the ban they handed Chelsea in February after an investigation into the club's signing of foreign U18 players.
The rules state no player under 18 is allowed to move to a club in a different country unless their parents are moving there for non-footballing reasons, or unless they are aged 16-18 and moving within the European Economic Area.
As it stands, Chelsea can still buy players but would not be able to register them until the summer of 2020.
However, the club maintained its innocence and stated they will exercise the option to go to the Court of Arbitration for Sport in Lausanne to see if the ruling can be overturned or frozen.
"Chelsea FC has today received the decision of the FIFA Appeal Committee," said Chelsea in a statement on Wednesday afternoon. "The club is very disappointed that the transfer ban of two consecutive registration periods was not overturned.
"Chelsea FC categorically refutes the findings of the FIFA Appeal Committee. It acted in accordance with the relevant regulations and will appeal the decision to the Court of Arbitration for Sport (CAS)."
Chelsea's last purchase, Christian Pulisic, will not be affected as he was registered by the club in January and loaned back to Borussia Dortmund, but permanent moves for loan signings Mateo Kovacic and Gonzalo Higuain are not possible at this stage.
The Appeal Committee determined the ban will only apply to the senior team and players under the age of 16 and from the UK can still be acquired by Chelsea.
The ban will also not apply to Chelsea Women or Futsal team.