The City captain was dismissed by referee Chris Foy for a two-footed challenge on Manchester United winger Nani.
City boss Roberto Mancini admitted that he was disappointed with the decision and confirmed that the club would be appealing.
However, the Football Association have decided that Foy's initial verdict was the correct one.
As a result, Kompany will now serve a four-match suspension, starting with tomorrow night's Carling Cup semi-final against Liverpool.
He will also miss two Premier League matches against Wigan Athletic and Tottenham Hotspur, as well as the return leg with Liverpool.