The county council's planning committee rejected proposals to build 133 homes on land at Mindale Farm, Meliden.
It followed objections by Prestatyn town council and residents.
Members said they were concerned about the scale of the development and its impact on road safety and flooding in the area.
The application by Penrhyn Homes had been recommended for approval by officers, which said there were limited technical grounds for refusal.
Plans for a housing development in Denbighshire have been turned down against the advice of council officers.