Part of Kenneth Grahame's novel was inspired by Goring Weir, which will be developed to provide electricity for 300 homes.
Charles Streeten, appearing for Goring Council, read out a passage where Mole is "listening to the pleasant sound of water lapping over a weir".
The judge described the excerpt as "telling" but dismissed the challenge.
Mr Justice Cranston said: "Books such as Jerome K. Jerome's Three Men In A Boat and Kenneth Grahame's Wind In The Willows have descriptions of the villages or drew inspiration from the site of Goring Weir."
He also said the stretch of the Thames between the villages of Goring and Streatley, located in a conservation area, had a rich cultural history.
However, he added the decision to give the scheme on the Oxfordshire and Berkshire border the go-ahead in March was not irrational and South Oxfordshire District Council was entitled to reach the planning judgment it did.
Mr Streeten fears the scheme will cause noise pollution and visually harm the site.
He read the passage out of the Mole character "mucking about in a boat on the river" to emphasise his point.
Part of the existing weir at Goring Lock will be demolished to make way for the three 3.5m (11ft) diameter screws needed for the scheme.
It will also include a fish pass, eel pass and a flood control gate.
Extracts from The Wind in the Willows were read out in court in an attempt to stop a hydro-electric scheme.