The Football League originally banned 58-year-old Cellino in December for failing their "fit and proper person's test" for running a club after he was found guilty of tax evasion in an Italian court last year.
He was initially given until Dec. 29 to resign as director of the club but was allowed to continue until after the appeal.
In a statement following the decision by the Football League's Professional Conduct Committee (PCC), Leeds said they were "surprised and disappointed" by the verdict, but would continue to take legal advice.
"Mr Cellino would like to thank the fans, sponsors and members of the wider footballing community that have given him overwhelming support, not just since the disqualifying order was issued but since he arrived at the club," a statement said.
Cellino completed his takeover of the struggling club in April last year despite the Football League's attempt to block the deal in line with its tougher rules on club owners.
However, after more details of Cellino's offence - the non-payment of import duties on a boat - emerged from a Cagliari court, the Football League decided that he had committed a "dishonest act" and banned him on Dec. 1.
"The PCC found that the reasoned judgement of the Italian Court, once it had become available, was for an act involving dishonesty as determined by the Board in its original ruling in March 2014," a Football League statement said.
In its judgement, the PCC stated: "We consider that the judge's findings of fact and her description of Mr. Cellino's state of mind based on them, is of conduct which would reasonably be considered to be dishonest.
"We therefore conclude that Mr. Cellino has been convicted of an offence involving a "Dishonest Act" within the meaning of the rules, and that he is accordingly subject to a "Disqualifying Condition".
Cellino is disqualified from ownership until April 10 and could be forced to sell the club.
Before the appeal hearing he said he feared for the club's future.
"I worry for the club, not just the season. Tomorrow is a big day," he was quoted as saying in the Yorkshire Post.
"If I'm not here, if I can't help, then who looks after the club? I don't know what the League will do.
"If they force me out and tell me to sell, do I go or do I fight?"
Leeds were English champions in 1969, 1974 and 1992, runners-up in the 1975 European Cup final and Champions League semi-finalists in 2001.
They are currently 20th in the (second tier) Championship, three points above the relegation zone.
(Editing by Mike Collett)
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