Councillors have unanimously rejected plans for a 1500 sq m (16,000 sq ft) supermarket in a resort despite a recommendation for approval.
Opponents say the town's distinct flavour is under threat
Tesco has been pressing for a superstore development on Cromer Road in Sheringham for more than a decade.
It has already submitted an appeal against Thursday's rejection by North Norfolk District Council.
Campaigners against the plan say a store would increase traffic and drive out small traders, but Tesco deny this.
Planning officers had recommended approval of the project but councillors voted for rejection by 17 votes to nil.