Shirley Chaplin, 54, took the Royal Devon and Exeter NHS Trust Hospital to an employment tribunal, claiming that taking off a necklace bearing a crucifix would "violate her faith".
The trust said the move was not specifically about the crucifix, but about health and safety concerns about patients grabbing necklaces.
Today employment tribunal panel chairman John Hollow found against Mrs Chaplin, who had worn the emblem throughout her 30 years as a nurse.
Mr Hollow ruled the trust had acted in a "reasonable" manner in trying to reach a compromise.
He said the damage to her was "slight" and noted that wearing a crucifix was not a requirment of the Christian faith.
In a 71-point statement, Mrs Chaplin, who wore the crucifix to the hearing in her home city of Exeter, said she was "personally convicted" to wear the emblem, given to her as a confirmation gift in 1971.
She said: "I have been a nurse for roughly 30 years and throughout that time I have worn my crucifix.
"The crucifix is an exceptionally important expression of my faith and my belief in the Lord Jesus Christ.
"To deliberately remove or hide my crucifix or to treat it disrespectfully would violate my faith."
She started working for the trust continuously in 1989, being made a grade D nurse in 1994, and promoted to an E grade nurse on 2001.
Wearing the old uniform, the cross was visible and she wore it safely for 30 years, Mrs Chaplin said.
When a new-style uniform was introduced, there were still no issues until she was asked to remove the necklace last summer
It was suggested she pin the crucifix inside her uniform but Mrs Chaplin could not accept that.
She explained: "I was being asked to hide my religion and my faith. I found it disrespectful."
In September a request to keep the cross pinned outside her uniform was turned down, she said.
This answer "confirmed to me that they simply wanted to remove the visibility of the crucifix", she said.
Last July, she was told she was facing a "disciplinary sanction". In August she was threatened with formal disciplinary action.
She said she received a letter in September telling her the cross was not a "mandatory requirement" of her faith, unlike Muslim headscarves, which "therefore could be exempted".
She said: "I view this as a clear discrimination against Christians. The respondent (the trust) clearly regarded themselves as experts on religious manifestations of all faiths."
Later that month she accepted formal re-deployment from frontline duties.
Mrs Chaplin's case was highlighted by the Archbishop of Canterbury in his Easter sermon last weekend when he referred to "wooden-headed bureaucratic silliness" which has seen some Christians stopped from wearing religious symbols at work.
Rowan Williams said there was a "strange mixture of contempt and fear" towards Christianity.
But he urged believers to keep a sense of perspective in the face of opposition and "think about the larger picture".
After the hearing Mrs Chaplin said the result was "a very bad day for Christianity."
Asked about her future she said: "I don't know. I wait to find out - but I will be going to work tomorrow."
She vowed not to remove the crucifix, explaining: "I wouldn't have gone this far if I was prepared to take it off.
"I was always prepared to modify the chain with a magnetic clasp(meaning that it would separate more easily if grabbed by a patient)."
Mrs Chaplin, a member of the Free Church of England, added: "I think any Christian in the workplace must be extremely careful to mention the word 'Christianity'."
Asked if she thought other faiths were treated differently, she said: "I think from the press that seems fairly evident."
She conceded that her case was always going to be hard to win as she was "one person taking on a government body."
Mrs Chaplin had considered flexible working after retirement but that avenue was now closed to her, she said.
She explained: "Nurses can retire at 55 but the majority then go back on a nurse bank and to do shifts that suit them. So basically they've taken that option away from me."
Her lawyer Paul Diamond said the case would now go to employment appeal tribunal in London.
Following the ruling, a hospital spokesman said: "The tribunal decision has confirmed the trust has acted in an appropriate and sensitive manner in seeking to deal with the issues raised by Mrs Chaplin.
"At all times the trust has given the safety of staff and patients paramount importance. We are pleased that the panel agreed with this view and confirmed the actions we have taken to attempt to resolve this issue have been fair and reasonable and recognises the strenuous efforts that have been made to find a solution.
"Our view was - and remains - that staff should comply with trust policy on dress code/uniform and that wearing a necklace runs the risk of compromising patient and staff safety. Our policy is entirely consistent with Department of Health guidelines.
"A number of unsubstantiated claims were made during the tribunal and we are satisfied that these have been shown to be completely without foundation."
Expressing his disappointment at the outcome, Mr Diamond said that such cases were difficult to win "unless you've got two to four people prepared to lose their jobs over it".
He said: "That is a very high threshold, that we say is emasculating the legislation."
Another nurse in a similar position to Mrs Chaplin, June Babcock, removed her cross when asked.
Explaining the majority judgment of the tribunal of three, Mr Hollow said there was "no criticism whatsover of her (Mrs Chaplin's) dedication, skills or ability as a nurse and no doubt cast on her religious beliefs as a Christian or member of the Free Church of England".
He added: "Sadly, those beliefs have brought her into direct conflict with the respondent (the trust) and its uniform policy."
He continued: "The evidence we have is that there is no mandatory requirement of the Christian faith that a Christian should wear a crucifix."
Mrs Chaplin had worn the crucifix since her confirmation in 1971, the tribunal heard.
It found that two female Muslim doctors were permitted to wear what he called a "close-fitting sports hijab", which resembled a balaclava and fitted "extremely snugly".
Mrs Chaplin had been offered a number of alternatives by the trust, including wearing the cross pinned inside her tunic or beneath a T-shirt. Neither was favoured by Mrs Chaplin as the crucifix would be hidden.
Mr Hollow added: "It could hardly be said that a hijab, particularly a sports, close-fitting hijab, would represent a risk of injury in the same way as a hard metal object and in those circumstances there is no comparison to be drawn between them for purposes of regulation."
He concluded that the tribunal could not say she was treated less favourably than the Muslim doctors.
The trust had made efforts to reach an agreement with her and the majority of the panel did not find that she was put at a "particular disadvantage".
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