Officials on the the Vienna-based organisation's 35-nation board of governors have indefinitely blocked Iran's request, although the ruling does leave open the possibility of revisiting it in the future.
"If they help us, we will appreciate it - if not, we will do it by ourselves"
Manouchehr Mottaki, Iran's foreign minister
Send us your views
Tehran denies claims it is working on a nuclear weapons programme, saying it is only interested in for producing energy and the Arak reactor would be used to create radio-isotopes for medical purposes.
Iranian requests for IAEA technical assistance on seven other nuclear energy projects were approved in a compromise reached ahead of the IAEA board meeting.
The projects were judged not to pose a risk of being diverted towards the manufacture of nuclear arms.
Iran's heavy water Arak reactor is due for completion in 2009.