Canada finished fourth in the Pan Am Games in Lima, Peru to qualify for Tokyo, but the disqualification of Walker's scores dropped the team to seventh.
Walker tested positive for a cocaine metabolite, which the 27-year-old from Aurora, Ont., says she inadvertently ingested by drinking coca tea.
Canada will be able to enter just one horse and rider in the individual event in Tokyo.
The Court of Arbitration for Sport based in Lausanne, Switzerland heard joint appeals from Walker and Equestrian Canada on Dec. 21 and Dec. 23.
CAS announced its decision Tuesday and said in a statement that reasons for the decision will be given to Walker and Equestrian Canada "in the coming weeks."