The WA State Administrative Tribunal on Thursday rejected an appeal by Mr Forrest's cattle company to build nine weirs along the Ashburton River, also known as Mindurru.
Native title group Buurabalayji Thalanyji Aboriginal Corporation said it was grateful the decision put its spiritual connection and culture before private cattle interests.
"The Thalanyji people have been custodians of the river for over 60,000 years, and damage to the river rightfully should not be allowed for the sole benefit of a local pastoralist," it said in a statement on Friday.
Forrest's agri-food business, Harvest Road, which runs numerous stations including the cattle station Minderoo, says the weirs would have improved fresh water access for both agriculture and the local ecosystem.
"Our respectful desire has always been to work collaboratively with the Thalanyji people – the traditional custodians of the land – to nourish the water and land at Minderoo Station," a spokesman said in a statement.
"We are considering our options and remain willing to engage with the Buurabalayji Thalanyji Aboriginal Corporation in respect of achieving an outcome that improves the sustainability of agriculture in the area."
The tribunal's decision comes four years after Mr Forrest first requested approval to build the weirs to drought-proof the station, nearly 1400km north of Perth, through cattle subsidiary Forrest and Forrest Pty Ltd.
Leaky weirs do not stop water flow, but use natural debris to slow it down and allow it to rehydrate soil instead of evaporating quickly.
After trialling a weir in 2011 with the support of Thalanyji Elders, the original proposal sought permission to build 10 more weirs and a granite quarry under the same permit which allowed Rio Tinto to blow up 46,000-year-old rock shelters at WA's Juukan Gorge.
The company later dropped one weir and the quarry from its plans.
Then Aboriginal affairs minister Ben Wyatt rejected the proposal but the company lodged an appeal to review the decision, arguing not all of the river could be considered a sacred site.
Mr Forrest argued the word sacred did not apply to mythological story, song or belief.
The Thalaynji people were concerned the weirs could impact the river's ecosystem and flow, and disturb the water serpent Warnamankura who lives there.
"Changes to the river that are caused by the weirs might make Warnamunkura angry," a traditional owner said in evidence.
"In the worst case he might leave the river and we will see fish die and water dry up."
The tribunal found the entirety of the river was culturally significant to the Thalaynji, who say it has healing powers and its women are named after.
The Thalanyji said the decision provided hope the lessons needed after the destruction of Juukan Gorge were being learnt.
There were also concerns the construction of the weirs would damage sites of archaeological significance as cultural artefacts had previously been found on the riverbank.
The decision was made under WA's old Aboriginal cultural heritage laws, which have since been overhauled.
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