The club's influential captain was sent off just 12 minutes into Sunday's FA Cup Third Round match for a clumsy two-footed challenge on United winger Nani and the holders were beaten 3-2 in a thrilling game.
City manager Roberto Mancini had been confident of winning the appeal but must now do without the Belgian for both legs of the League Cup semi-final against Liverpool as well as Premier League matches against Wigan Athletic and Tottenham Hotspur.
"Kompany will serve a four-match suspension with immediate effect," the FA said in a statement.
"The suspension consists of a statutory three-match suspension for serious foul play plus one additional game given this is Kompany's second dismissal of the season."
Kompany's other red card was in October's 3-1 win against Wolverhampton Wanderers in the league.
Hours before the appeal hearing, Mancini had told a news conference he thought the red card would be overturned because the defender had been "sent off for nothing."
"If it will be like this [and the card is upheld] it will not be correct," the Italian had said.
Mancini also stuck by his earlier assessment that United striker Wayne Rooney had gestured to referee Chris Foy to encourage him to send off Kompany.
"I joked with Wayne Rooney. But he did this," Mancini said, miming a card being waved in the air. "Nani was there, he didn't say anything."
Rooney rejected Mancini's accusation, writing on Twitter the day after the game: "Funny how people think I got Kompany sent off. I'm not ref. I didn't give red card. But it was a clear red card. 2 footed tackle."
Kompany's absence comes as the Premier League leaders grapple with the absences of Yaya and Kolo Toure who are on Africa Cup of Nations duty with Ivory Coast.
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