The refusal leaves a question mark over the future of BAe's north Bristol Filton site, former home production base of Concorde and now a major facility for the European Airbus.
The aircraft company had said that its proposal for a business airport using Filton's runway - one of the longest in Europe - was vital in securing the jobs of 3,700 employees. Income from the airport would have reduced the pounds 1.5m annual operating deficit of the field.
Mr Gummer announced his decision at a business seminar in Bristol today. It follows weeks of speculation on the plan to rival the municipally-owned Lulsgate Airport for business traffic.
Mr Gummer said that he was accepting the recommendation for dismissal by Ms Jean Brushfield, who conducted a three-month public inquiry into the proposal last year.
Mr Gummer said: "I recognise that this decision, while welcome to many local residents, will disappoint others, particularly local businesses. But the decision ends a substantial period of uncertainty about future air services in the region.
"It leaves Bristol's existing airport at Lulsgate with the opportunity to develop its services and the new terminal which was granted planning consent last year."
The Government will now commission a study of future demand for air travel in the region and the capacity of existing airport facilities, he said.
BAe's proposal would have involved converting an existing building to a business terminal. The company had hoped for around 23,000 aircraft movements a year, including 6,000 at night - mainly business and freight traffic to UK and Continental destinations.