The decision is a further blow to the Al Huda association which had hoped to set up a private preschool for 15 to 20 students in an apartment in Zurich's Volketswil, NZZ reports.
It comes after the Zurich cantonal authorities also rejected Al Huda's plans for the school which planned to hire two kindergarten teachers, a part-time Arabic teacher and a part-time Quranic teacher.
In its non-binding ruling, the court said there was a lack of "clear boundaries" between the preschool's secular and religious teachings.
It was not clear how any religious instruction would influence teaching on issues including pre-marital sex and homosexuality, the tribunal said.
There was "considerable danger" the school's Islamic nature would mean the secular goals of Switzerland's schools were not met, according to the ruling.
The tribunal also expressed concerns over possible links between Al Huda and the Islamic Central Council of Switzerland (ICCS).
Although the woman charged with running the proposed kindergarten left the ICCS in 2012, authorities believe she shares that organization's goals. These aims include the founding of schools to act as a bastion against secularization, the tribunal said.
Switzerland has a fraught relationship with Islam and made international headlines in 2009 with its “anti-minaret” referendum which saw almost 60 percent of voters backing a ban on the building of such towers.
Four Swiss mosques had towers at that time.
Muslims make up around 4.9 percent of the Swiss population with the majority of those people coming from the Balkans and Turkey.