The Crown Prosecution Service (CPS) used a confiscation order to seize John Dawes' assets after he was convicted of drug dealing and money laundering.
Helen Dawes maintained she was innocent of any wrong-doing and that her role was simply to run the household.
But the judge disagreed and said she was "shutting her eyes" to the obvious.
The CPS launched the High Court action to seize Dawes' assets after he was jailed in 2005 for 24 years.
But his wife fought the confiscation order claiming she was not party to her husband's activities and that she had a 50% stake in the home, valued at £177,486.
She claimed her role was simply to look after the house, their son and do the cooking while Dawes ran the finances.
But on Tuesday, Mr Justice Collins said: "Mrs Dawes turned a blind eye to what was going on, not because she necessarily did not want to know, but because she took the view that her part was merely to run the home, look after her child and provide for her husband."
He added: "It seems to me she has been shutting her eyes to what should have been obvious."
Dawes was estimated to have earned £8,283,161 between 1997 and 2003 from drug crime and he was ordered in September 2008 to pay back £355,000.
The court heard Mrs Dawes and her husband had several bank accounts with significant sums of cash passing through.
The amount of money involved was far in excess of what the couple legitimately earned.
Mrs Dawes has since moved in with her elderly father.
Mr Justice Collins said there was no reason why their son, who is in full time education, could not find somewhere else to live now he is over 18.
Dawes lost an appeal against his conviction in 2007 but maintains his innocence.
The wife of a jailed Nottinghamshire drugs baron will lose the family home after a High Court judge ruled she turned a blind eye to his activities.