The High Court rejected the application by the Almagor Terror Victims Association on Tuesday evening against the release of 26 Palestinian prisoners.
The prisoners are being released as part of a deal that was made in July to kick-start the peace negotiations between the Palestinians and the Israelis.
The High Court ruled that it did not have jurisdiction on the matter and that two prior applications that challenged the government's decision were similarly rejected.
Deputy Defense Minister Danny Danon (Likud) said Tuesday "The images of the freed killers tonight will be engraved on the memories of the future generation of terrorists who will also dream of returning home as heroes." Danon was speaking at a conference in Beit Shemesh.