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John Rutter was jailed for three years and eight months in September last year after being convicted of perjury and forgery in a plot against Diaz that prosecutors said amounted to blackmail.
He had sought to have the convictions overturned citing errors at his trial. However a three-justice panel from the 2nd District Court of Appeal rejected Rutter's claim in an 11-page ruling released Monday.
Rutter had offered to sell Diaz nude photographs he had taken of her in 1992 for 3.5 million dollars, claiming she had signed release documents that allowed him to hawk the photos to the highest bidder.
The trial heard how he had threatened to sell the photos to a celebrity magazine unless Diaz paid him for the haul of pics.
However the actress denied ever having signed release forms and during the trial experts testified that Rutter had faked the actress's signature in a bid to dupe her into making the multi-million dollar payout.
Rutter was convicted and jailed but at his sentencing denied ever having done anything wrong.
"I deeply regret the perception that I had done wrong," Rutter said. "I never intended any harm ... It's a shame this whole mess ever happened."
The photographer insisted that the case involved a "misunderstanding."
Diaz's film credits include "There's Something About Mary", "Charlie's Angels" and "Gangs of New York."