Having renounced his New Zealand citizenship, Joyce will now stand in a by-election on December 2 in the constituency he thought he already represented.
But the court found Mr. Joyce was a New Zealander by descent at the time of his nomination a year ago.
While the judges said it may be harsh to disqualify Australian-born candidates who had no reasons to believe they were not exclusively Australian, "those facts must always have been knowable".
It tumbled to a 0.8 per cent loss after the court disqualified Deputy Prime Minister Barnaby Joyce, forcing a by-election, but it bounced to close down 13.1 points, or 0.22 per cent, at 5903.2.
The others were Greens' Larissa Waters and Scott Ludlam and One Nation's Malcolm Roberts.
He said Matt Canavan would be restored to the cabinet immediately.
Joyce has been deputy prime minister since February 2016 when he was elected head of the National party, the junior partner in Australia's governing coalition. He later found he was British because his father left Cyprus while it was a British colony.
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Joyce told lawmakers in August he had discovered he was a New Zealand citizen, throwing his position in parliament into jeopardy. Unlike in the house, the ineligible senators' seats will be given to another member of their parties, leaving balance of power in the Senate unchanged.
Speaking soon after the announcement of the decision, Joyce admitted he wasn't entirely surprised by the High Court's decision.
Turnbull says this is "clearly not the outcome" the government was looking for.
Joyce also held a New Zealand citizenship.
Members of Australia's national parliament can't be citizens of another country, according to section 44 of the country's constitution.
The seven judges rejected the government's argument that five of the lawmakers, including three government lawmakers, should be exempt from the ban because they had not voluntarily acquired or retained citizenship of another country.