The Heritage Lottery Fund said the project lacked backing from Conwy council and was deemed "high risk".
The council has applied to have the Grade II-listed structure demolished.
However, a protracted legal dispute over the ownership of the pier is still rumbling on between businessman Steve Hunt and the council.
The bid for lottery cash from the HLF was made by the Colwyn Victoria Pier Trust, who described the request as a "last chance" for the pier.
Announcing that the funding bid was unsuccessful, HLF's chief executive Carole Souter said: "HLF takes its role of investing National Lottery players' money extremely seriously and we only support projects that we are confident can deliver long-term benefits.
"Unfortunately, we have not had a clear enough indication of strong support from Conwy County Borough Council.
"In light of this as well as the absence of other confirmed financial support and the potential for increased costs, the application was deemed high risk."
The campaigners trying to save the pier said on Wednesday they were "bitterly disappointed" by the decision.
Conwy's council leader Dilwyn Roberts said he realised the pier trust would be disappointed, stressing that the authority would continue to talk to the trust and Colwyn town council and "would welcome talking to them further about proposals for legacy".
However, restoration is not on the council's agenda following the HLF announcement.
"As the application was unsuccessful, the council's application to demolish the pier will continue through the planning process," said the council leader.
Colwyn Bay's Victoria pier has failed to win a £9.6m bid for lottery heritage restoration cash and now faces demolition.