The other seven member nations already allow same-sex marriage.
Plaintiffs Horst Michael Schalk and Johann Franz Kopf had argued that Austria violated their rights to marry, to be free from discrimination and to privacy and family life, as guaranteed by the European Convention on Human Rights.
But the court decided not to "rush to substitute its own judgment in the place of that of national authorities."
The ILGA-Europe board co-chair, Martin K.I. Christensen, said the group was "disappointed" with the ruling but that "Europe as a whole is gradually moving towards full equality for same-sex families."
He said the court also "made various important statements (in its ruling) which will eventually serve to advance legal rights for same-sex families."
Homosexual Initiative Vienna, or HOSI Wien, said Austrian activists had not expected to win the case flat-out because the time is not quite ripe.
"That would have been completely unrealistic to expect since it would have been a precedent with indirect consequences for all member states of the Council of Europe," the group said. "If the court had found a violation in Schalk vs. Austria, citizens of … Russia, Italy, Poland or Ukraine would also have been able to successfully challenge the ban on same-sex marriage in their countries."
Still, the group had expected a more gay-friendly ruling on the matters of non-discrimination and respect for privacy and family life, which got a 3-4 vote from the court.
"It is once again quite obvious that the court is not running in the forefront of social and societal developments", said HOSI’s Kurt Krickler. "The LGBT movement therefore should not rely on international human rights courts in advancing legal progress for LGBT people; it is rather at the political level that we have to continue to struggle for social change and equality."
"We would have expected that the court would have found at least a violation of the right to respect of private and family life guaranteed by Article 8 – in conjunction with Article 14: nondiscrimination – of the convention at the time when Schalk and his partner had filed the application as there was no alternative option for them to have their partnership legally recognised," Krickler said.
"Austria only introduced registered partnership for same-sex couples as of 1 January 2010."
Gay marriage is legal in Belgium, Canada, Iceland, the Netherlands, Norway, Portugal, South Africa, Spain, Sweden, Mexico City, Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and Washington, D.C.