Residents in Llay objected to the plans, saying the size of the development on land at Home Farm, Gresford Road, was too big.
The application had been recommended for approval with planners saying it would make a "significant contribution" towards meeting future housing needs.
But the planning committee threw out the plans amid cheers from the public.
An application to build 365 new homes in a village has been rejected by Wrexham councillors.