Ash from a Devon incinerator cannot be recycled at a nearby quarry, a development committee has ruled.
Residents in Buckfastleigh had opposed the plan for bottom ash to be taken from the yet-to-be-built incinerator in Plymouth to Whitecleave Quarry.
MVV Umvelt wanted to move 56,000 tonnes of ash to the quarry each year to be recycled into construction material.
Devon council's development management committee rejected the plans by six votes to five. MVV plans to appeal.
In MVV Umvelt's plans, which had been recommended for approval by planning officials, ash was to be transported from the approved Devonport North Yard incinerator in Plymouth to the quarry.
It would then be stored outside before being processed and recycled.
Paul Carey, from MVV, said: "The people who are informed on this decision have not objected: Natural England, the National Park, the Highway Agency.
"Waste is a very regional issue and something that we all have responsibility for."
However, critics in Buckfastleigh raised concerns about the number of vehicles that might travel to the site, and the ash being potentially hazardous.
The Buckfastleigh Community Forum said its concerns included waste being next to a residential area, as well as being right on the edge of Dartmoor National Park "right in the heart of the tourist belt".
About 50 people from the town who opposed the scheme attended the four-hour meeting and debate at County Hall in Exeter.
During the meeting, MVV reiterated to the committee that the scheme was "not, categorically not, a toxic dump".
After the rejection of the scheme, Neil Smith, from the community forum, said the committee's decision was "fantastic".
He said: "We have had this powerful campaign that has been going on for a year, and we've had such a huge support in the town.
"It just vindicates it, at the end of the day. This is democracy. It's what localism is all about."
Before the decision, the company said it would lodge an appeal if the committee rejected the scheme.