He spent 45 minutes putting his case to more than 200 association members at a meeting in his Leicestershire North West constituency. But in a secret ballot they voted not to re-adopt him as their candidate.
The MP said afterwards: "I am saddened the association has taken the view they have. I think it is a reflection of the association rather than me. I rather suspect the deselection was because of homophobia."
Mr Ashby faced members at Redgate Lodge, in the paddock area of the Donington Park race circuit in north-west Leicestershire. The barrister and company director, who became an MP in 1983, answered questions before the private vote.
The 53-year-old MP's future in politics was thrown into doubt after he lost a courtroom libel action against the Sunday Times, which claimed he was gay. Mr Ashby was left facing legal bills of more than pounds 400,000.
His stormy relationship with his wife, Silvana, was paraded before the jury during the four-week case as he sought damages over an article in January last year alleging he shared a double bed with another man on holiday in Goa.
In his speech last night, he spoke about the Press and his libel action, as well as his achievements in the constituency he has won three times since 1983. His address won brief applause.
Asked if he regretted taking the libel action, he said: "My pocket regrets it. I am short of a bob or two."
Speaking later, Mr Ashby added: "I am absolutely certain I am the only person who could win this seat, but being in public life has been very difficult. If the media continue to treat people in the way they have treated me, they are going to get very few people prepared to go into public life.
"I am going to give my total support to the government and will be supporting any Conservative candidate in this seat.
A constituency association statement said: "At the association general meeting held tonight the association voted for a change in candidate at the next general election. The task for the association now is to select a prospective candidate as soon as possible."
Mr Ashby held a majority of only 979 . The selection of a new candidate will begin on Monday.
Mr Ashby brought the spotlight back on himself again this week when he voted with Labour to defeat the Government, giving gay couples the same right to inherit the tenancy of their homes as heterosexuals.