A judge ruled Tuesday that the residents' lawsuit was filed after the statute of limitations had expired.
The city says the Prospect Park West bike lane is part of a "street calming" project. It says cars often sped in the area, and bicyclists rode on the sidewalk.
Opponents say the lane hinders drivers and can be dangerous for pedestrians.
Transportation Commissioner Janette Sadik-Khan called it a "frivolous lawsuit."
The opponents say they're reviewing their options.