Oriol Junqueras is one of a number of Catalan politicians in jail for his role in Catalonia's 2017 unilateral declaration of independence.
The politician, from the left-wing ERC party, will not be given leave of absence from prison to attend a swearing-in ceremony in Madrid where he would pledge to uphold Spain's constitution.
The court ruled that were Mr Junqueras to swear the oath the Spanish state would be "obliged" to let him travel abroad to take possession of his European Parliament seat on 2 July in Strasbourg.
But it argued that the former deputy leader of the Catalan regional government is a flight risk and should therefore remain in custody.
Mr Junqueras and his comrades face years in prison and a ban on public office if they are convicted of charges including rebellion.
Some of the politicians who organised the independence referendum and subsequence declaration of independence, such as the region's former leader Carles Puigdemont, fled the country and are remaining in Belgium.
Mr Puigdemont and another politician wanted by authorities, Toni Comin, also stood in the European elections and were elected.
But if they attend the swearing-in ceremony in Madrid, they would face arrest.
In Friday's ruling, the supreme court said that if Mr Junqueras was allowed to travel outside Spain to attend the parliamentary session it would mean "the loss of judicial control".
It added that Brussels, one of the parliament's seats, "is the place where one of fugitives from justice says that he has established the seat of the Catalan Republic's government in exile".
Catalonia has a large presence in Brussels and it is from the EU's capital that Mr Puigdemont has launched a campaign to drum up international support for the cause of independence.
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