"The appeal was not accepted," the spokesman for the office of Prosecutor, Marcus Neher, was quoted by the Austrian APA news agency as saying.
Sanader, wanted in Croatia for white-collar crimes, will thus be remanded in custody until further notice.
Sanader's lawyer Werner Suppan said he would consider sending an appeal to Austria's Supreme Court, citing his client's human rights.
Sanader's appeal against his extradition to Croatia will be considered on 21 June by three judges of the high provincial court in Linz after on May 9 the Salzburg court approved Sanader's extradition to Croatia. Lawyer Suppan, who represents Sanader in Austria, appealed, claiming that Sanader would not have a fair trial in Croatia.
Sanader was arrested in Austria on 10 December 2010, on a warrant issued by Croatia. He has been in custody in Salzburg since.
The Croatian judiciary suspects him of abuse of office. He is charged with having syphoned money from public companies and ministries via the private Fimi Media company. He is also charged with receiving kickbacks amounting to HRK 3.5 million for the approval of a loan which Hypo Bank gave to the Croatian government while he was Deputy Foreign Minister.
The Croatian anti-corruption agency USKOK is also investigating his role in illegal business deals between the state-owned power company HEP and the private Dioki company.
Sanader and Dioki owner Robert Jezic are under investigation on suspicion that they tried to ensure unlawful gain of EUR 10 million for Jezic's company, specialised in petrochemicals and plastics production, at the expense of the state-run JANAF oil pipeline operator.
Sanader is also under investigation in Austria on suspicion of money laundering.