Zlatan Elek of Srpska Lista, or Serb List, said on Tuesday the move was "done on the orders of (Kosovo's prime minister) Albin (Kurti) in order to gain some easy political points," adding they would appeal the decision.
The Central Election Commission declined to certify Srpska Lista, justifying the move by pointing to its nationalist stance and close ties to Serbia.
Srspka Lista paty has nine out of the 10 MPs the ethnic Serb minority currently has in the 120-seat parliament.
Kosovo holds a parliamentary election on February 9, which is expected to be a key test for Kurti, whose governing party won in a landslide in 2021. European Union-facilitated negotiations to normalise ties with neighbouring Serbia are a top priority for any cabinet in power after the polls.
Western powers also expressed concern about the move, fearing it may further aggravate the already tense ties between Kosovo and Serbia.
Kosovo was a Serbian province until a war between Serbian government forces and ethnic Albanian separatists in Kosovo, which left about 11,400 dead, mainly ethnic Albanians. NATO's 78-day bombing campaign in 1999 ended the war and pushed Serbian forces out. Kosovo proclaimed independence in 2008, which Serbia doesn't recognise.
Belgrade still considers Kosovo as its province and has a major influence on the ethnic Serb minority living there.
Serb President Aleksandar Vučić criticised the move to ban the party, saying that, "Kurti is trying to root out the Serb people from (our) southern province."