State television said the Council decided on Tuesday to turn down the United Nations' convention, claiming it was un-Islamic and incompatible with Sharia law and the constitution.
Reformist parliamentarians were strongly criticised by Guardian Council conservatives, many of who claimed the convention was colonialist and against Islamic traditions.
The reformist-dominated parliament ratified the bill last month, believing it would help promote Iran's image abroad and help domestic problems at home.
But unelected body vets all legislation in accordance with Sharia law and has been at odds with parliament on many occasions in recent months.
President Muhammad Khatami acknowledged on Tuesday he had failed to fulfil pledges to the young voters who elected him to introduce more social and political freedoms, the state news agency IRNA reported.
"These days, it is difficult for me to speak because I feel the convictions that I held, what I said and expressed with sincerity and what people believed, have not been achieved," the president said in a speech.
Khatami, first elected in 1997, thanks to a massive youth vote, stressed the importance of living up to young people's expectations and warned that ignoring them would exacerbate tensions in the Islamic republic.
"Not taking into account young people and their expectations, and using religion and values to marginalise causes massive problems in our society," he said.
The remarks were a veiled swipe at Islamic conservatives who control the courts and top state arbitration bodies that have repeatedly undermined the reform efforts of Khatami's government.
About 70 per cent of the Iranian population is aged under 30.