East Lindsey District Council's planning committee said the site near Skegness was too rural and not "well connected".
The landowner applied for 18 all-year pitches, parking and toilets on land on the A158 off the Burgh le Marsh bypass.
Opponents said an influx of new people could strain schools and doctors' surgeries.
The district council has previously appealed for landowners to come forward with possible locations for 20 transit pitches and six permanent pitches to accommodate travellers.
The area currently has none.
The council's planning officers had recommended the scheme near Skegness be approved but councillors rejected it.
Lincolnshire County Council said feedback from the travelling community suggests any site should be closer to Skegness to accommodate those holidaying in the area.
In recent years, the resort has seen a number of unauthorised encampments.
Plans for a traveller site near a resort town have been rejected by councillors.