A housing estate had been earmarked for Radford Quarry, which is also home to the horrid ground-weaver spider.
According to the Buglife charity, the 2.5mm spider has been found in Plymouth and nowhere else in the world.
The species was one of the key reasons the plans have been rejected by an inspector. Conservationists said it was a "fantastic result for wildlife".
The 57-home development, proposed by Wainhomes (South West) Holdings Ltd, was rejected by Plymouth City Council last year but the applicant appealed and a planning inquiry took place earlier this year.
The appeal was dismissed by an independent planning inspector who judged the plans to be "harmful" to the spider and other biodiversity.
Source: Buglife
Buglife said the spider had been found in only three sites in Plymouth and one of those had already been developed on.
Almost 10,000 people signed a petition to save the spider, which has been rated as critically endangered by the International Union for Conservation of Nature (IUCN) and added to the global Red List of Threatened Species.
Andrew Whitehouse, Buglife's South West manager, said: "We believe that to knowingly cause the extinction of a species, no matter how small, is morally wrong.
"We welcome the decision of the planning inspector to dismiss the planning appeal and protect this site for nature and for the local community."
One of the world's most rare spiders has caused plans for dozens of new homes in Plymouth to be dismissed.