The 9th U.S. Circuit Court of Appeals ruled on Monday that Tyler and Cameron Winklevoss were savvy enough to understand what they were agreeing to when they signed the agreement in 2008.
The settlement called for a $20 million cash payment and a partial ownership of Facebook. A third classmate, Divya Narendra, was part of the settlement with the twins but did not pursue the second lawsuit seeking to undo the agreement.
The case garnered worldwide attention with the success of David Fincher's Oscar-nominated film "The Social Network."
The settlement is now worth more than $160 million because of Facebook's increased valuation.
The twins had alleged they were misled about Facebook's value when they agreed to settle their lawsuit that claimed Zuckerberg stole their idea to launch Facebook.
Facebook said Monday it was pleased by the ruling. Lawyers for the Winklevoss twins said they are reviewing the decision and have not decided on their next step. The twins could ask the Supreme Court to consider the case.
The Associated Press contributed to this report.