The 2005 Nobel Peace Prize went to the UN nuclear watchdog and its head, Mohamed ElBaradei, for their efforts to limit the spread of atomic weapons.
But the Japanese survivors group has vowed to press on with its campaign against nuclear weapons.
"It's very disappointing," said Terumi Tanaka, a victim of the 1945 Nagasaki atomic bombing, and Secretary-General of Hidankyo, also known as the Japan Confederation of A- and H-Bomb Sufferers Organisations.
"We had hoped that if we were able to win the award, it would give us a big boost and provide great encouragement for hibakusha [atomic bomb victims] who are growing old."
Asked what he thought of the award being given to the International Atomic Energy Agency and Mohamed ElBaradei, he said: "It's not an organisation that has conducted peace activities. It is very disappointing."
Hidankyo, as well as one of its founders, Senji Yamaguchi, a 74-year-old survivor of Nagasaki, had been nominated for the Nobel Peace Prize.
The atomic bombs killed around 140,000 people in Hiroshima and about 70,000 in Nagasaki by the end of 1945 alone.
Thousands died in the US attacks
on Nagasaki and Hiroshima
"The IAEA has worked for many years to fulfil its duties, but it has not gone all the way to abolishing nuclear weapons," said Mikiso Iwasa, vice -secretary-general of Hidankyo.
"We will not give up but continue to fight for the abolishment of nuclear weapons," he added.
Unlike many other Japanese anti-nuclear groups, Hidankyo is not affiliated with any political party or group.
Yamaguchi, 74, has spearheaded the victims' campaign against nuclear weapons.
He was 14 when the United States dropped the atomic bomb on Nagasaki in southern Japan on 9 August 1945, killing tens of thousands of people instantly and many others gradually.
Yamaguchi was left unconscious for 40 days and while he miraculously survived, the heat from the explosion, believed to have reached as high as 4000 degrees Celsius (7200 degrees Fahrenheit), left much of his face and body burnt.
He still has some trouble breathing and goes to a hospital once a week for treatment.
Shuntaro Hida, a Hidankyo member, said he had never thought it would be easy for his group to win the Nobel Peace Prize because he thought the United States would be opposed to it.
He told a news conference in Tokyo that if Hidankyo had won the prize, the United States could no longer defend the dropping of the bombs.
"It would have been a situation where the United States would not be able to offer any excuse"
"It would have been a situation where the United States would not be able to offer any excuse," Hida said.