South African Semenya, the double defending Olympic champion over 800 metres, and Athletics South Africa had challenged the IAAF's new regulations concerning athletes with differences of sex development (DSD).
The rules in question require athletes with naturally-occurring high levels of testosterone to take medication to reduce those levels, in order to compete in women's track events ranging from 400m to a mile.
The IAAF stated last year that those distances were selected because the "performance advantage" of having higher levels of circulating testosterone are "most clearly seen".
Semenya argued the regulations were "discriminatory, unnecessary, unreliable and disproportionate" and earned backing from her national government, but on Wednesday CAS announced it had found in favour of the IAAF, meaning the 28-year-old will now have to take medication to continue competing at international level.
The CAS ruling may be appealed at the Swiss Federal Tribunal within 30 days. The IAAF's rules are set to come into effect on May 8.
A CAS panel found the DSD regulations to be "discriminatory", but argued they were nevertheless necessary to maintain the integrity of female athletics.
"By majority, the CAS panel has dismissed the requests for arbitration considering that the claimants were unable to establish that the DSD regulations were 'invalid'," read an official release from CAS.
"The panel found that the DSD regulations are discriminatory but the majority of the panel found that, on the basis of the evidence submitted by the parties, such discrimination is a necessary, reasonable and proportionate means of achieving the IAAF's aim of preserving the integrity of female athletics in the restricted events."
Semenya also competes in the 1500m, and the CAS panel recommended the IAAF defer its ruling affecting athletes racing over that distance and a mile "until more evidence is available", while also expressing "some serious concerns as to the future practical application of these DSD regulations".
Following the announcement from CAS regarding the contentious case, the IAAF published a statement issuing its gratitude to CAS for its "detailed and prompt response to the challenge", while Semenya posted an image on Twitter bearing the words "sometimes it's better to react with no reaction".
Photo Getty Images. Caption: South Africa's Caster Semenya