The 29-year-old, who was granted U.S. residency in 2013, was charged in February with violating South Korea's military service regulations after failing to secure an extension to his overseas travel permit.
Bae was allowed to stay in the United States while his lawsuit against that decision was pending but a court in his home city of Daegu on Wednesday backed the Military Manpower Administration (MMA), Yonhap news agency reported.
Bae, who was contesting the MMA's assertion that he had not spent enough time out of South Korea in 2014 to qualify as an overseas resident, said he would join the army soon.
"I completely respect the court's decision, and I humbly accept the judgement by the law," he told Yonhap.
"I am sorry to those who have supported me, including all my fans and South Koreans, for causing anxiety."
With the country still technically at war with the North after the 1950-53 Korean War, all South Korean men between 18 and 35 must complete two years of military service.
The court had ruled that his refusal to sign up with the military ran "counter to the principle of fairness" in regard to other conscripts.
Most in the South agree conscription is necessary to deter North Korean aggression and the public backlash towards high-profile figures such as actors, musicians and sportsmen who seek to skip military service can be fierce.
Bae secured his second PGA title at the Frys.com Open in Napa, California last October and has secured exemption for 2016 after winning $2,047,187 1,315,574 pounds) so far in the 2015 season.
Bae, who will earn around $130 a month as a private in the army, took home $15,209 from his last outing on the PGA Tour after tying for 54th at the Greenbrier Classic earlier this month.
(Writing by Nick Mulvenney; Reporting by Kim Hooyeon; Editing by John O'Brien)
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