A racing tribunal last month found the 37-year-old guilty of threatening steward Terry Bailey and his family at a race meeting in Seymour, near Melbourne.
Nikolic had pleaded not guilty to the charges and alleged Bailey had issued his own threat to derail his career but an appeals board on Tuesday upheld the verdict.
"The language directed at Mr Bailey was not only grossly offensive to him, but worse, contained a sinister threat to his family. So much so, that in the immediate aftermath Mr Bailey arranged security at his home for a week," the appeals board said in notes on the decision.
"Disqualification is a drastic penalty but in the Board's opinion no lesser penalty is appropriate in the circumstances."
Nikolic's only recourse is to attempt to have the decision overturned by the Victorian Civil and Administrative Tribunal. It was unclear whether the jockey intended to appeal to the state government authority.
Nikolic has been one of Australia's most successful jockeys over his 22-year career but clashed repeatedly with stewards.
He was previously fined twice in 2010 and banned for six months, with four months suspended, for a heated outburst during a disciplinary hearing.
Nikolic is also set to appear in court to face assault charges against another jockey, the jockey's girlfriend and a policeman in three separate incidents last year. Nikolic appeared in court earlier this year to deny the charges.
- Terry Bailey