Russia has been suspended from international athletics since November 2015 after the McLaren report discovered widespread doping.
The Russians had hoped to be reinstated but IAAF officials meeting in Argentina on Friday unanimously upheld the ban and said that although Russia had taken positive steps in the right direction it had not done enough to merit inclusion.
"We have brought about change and it's change that is very viable," said Coe. "But we weren't yet at that point where every element of that criteria had been met."
Russia's political and sporting leaders have repeatedly denied state involvement in doping, a key sticking point in lifting the ban, although Russian athletes cleared by the IAAF were allowed to compete as neutrals at last year's world championships.
Such athletes will again be allowed to compete as neutrals in the European Championships, which are scheduled to start in Berlin on Aug 7.
(Reporting by Ramiro Scandolo, Writing by Andrew Downie; Editing by Gene Cherry and Ken Ferris)
