Ms Freestone, 33, brought the civil action against the Very Rev Brandon Jackson, 61, after alleging that they had an affair. The Dean was cleared of the allegations by a church consistory court last year. Ms Freestone's attempt to take him and the cathedral authorities to an industrial tribunal also failed.
Yesterday, Judge John Wain ordered that the action for trespass against the person brought by Ms Freestone be struck out after a hearing in camera at Lincoln County Court. The Dean's costs were awarded against Ms Freestone.
Afterwards Miss Freestone, who did not give evidence, said she was considering an appeal. Her solicitor, Gilbert Blades, added: "We are very disappointed because what we have been trying to do is achieve justice.We don't really think we have managed to do that."
The Dean's solicitor, David Negus, said: "The Dean applied for the action to be struck out on the basis that the allegations did not amount to a legal cause of action and was an abuse of process of the court. It was not a trial of the action, merely a preliminary hearing to determine whether it was right that her case should be allowed to go to trial. Unless Ms Freestone sees fit to appeal, this brings the hearing against the Dean to an end."
Last year, the Dean was cleared by a consistory court of having an affair with Ms Freestone, who claimed he commented on how attractive she was and once told her she had "come-to-bed eyes".
Ms Freestone's bid to take the cathedral to an industrial tribunal for sexual harassment was also dismissed.
The case has compounded problems at the cathedral, which has been embroiled in a long-running feud between the Dean and Sub Dean, Canon Rex Davis.
Senior clergy last week reacted with astonishment to Dr Jackson's demand that the cathedral be closed down for six months and "exorcised", with all its staff forced to resign.
The Archbishop of Canterbury has already called on both Dr Jackson and Canon Davis, to leave their posts and so end their dispute. He branded their feud - sparked by Canon Davis's loss-making trip to Australia with Lincoln's copy of the Magna Carta - "a scandal dishonouring the name of our Lord".
But a solution remains unlikely, with the Canon Davis insisting he will not resign and Dr Jackson agreeing to leave only if both men go.