Lynn applied for bail at Melbourne's Supreme Court, where his lawyers argued he should be released as the prosecution's case against him was weak.
The 59-year-old former pilot was brought into court on Thursday morning, when Justice David Beach announced he would not be released.
"The court has concluded that bail must be refused," he said.
Ahead of the decision, a nervous Lynn nodded at his son as he clutched a white folder and sat in the dock at the back of the court room.
He is charged with the murder of Carol Clay, 73, who went missing from a remote campsite in Victoria's northeast in March 2020, alongside her friend Russell Hill, 74.
Prosecutors opposed Lynn's bail, arguing their case was strong and he could not meet the high bar of having exceptional circumstances to permit release.
It's alleged Ms Clay was shot in the head by a bullet from the ex-pilot's gun at Wonnangatta, in the state's high country.
Lynn maintains his innocence, claiming the incident was accidental.
His barrister Dermot Dann KC argued the accused killer should be freed on bail as the prosecution case was weak and had "particular problems".
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