The court, in the northern city of Bologna, ruled that the former "boss of bosses" of Sicily's Cosa Nostra, could not get better treatment outside of jail.
"Toto" Riina, 86, nicknamed "The Beast" because of his cruelty, has been serving a life sentence since 1993. He is thought to have ordered more than 150 murders.
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He is also thought to have been behind the assassinations of the anti-mafia judges Giovanni Falcone and Paolo Borsellino in 1992.
But he is now being treated at the prison hospital in Parma for kidney cancer and a heart condition. He had asked for his sentence to be suspended or be placed under house arrest.
Already last year the court had rejected a similar request by Riina's lawyers. It said Riina was still dangerous, noting that he had never disassociated himself from the Cosa Nostra and that there was a risk he could
But the country's supreme court sent the case back to Bologna in a ruling last month.
Wednesday's ruling also ordered the seizure of a villa, plots of land and three businesses it said were fraudulently owned by Riina and his family. The assets were worth an estimated 1.5 million euros ($1.7 million).
It was the assassinations of Falcone and Borsellino in separate attacks 25 years ago that galvanized the state into tackling organized crime in Italy.
That led to the 2006 arrest of Bernardo Provenzano, the leader of the Cosa Nostra, after 40 years on the run. He died in prison in 2016.