The toque macaque is endemic to Sri Lanka and common on the island of 22 million people but is classed as endangered on the International Union for Conservation of Nature (IUCN) red list.
Agriculture minister Mahinda Amaraweera said in June that China wanted the monkeys for 1,000 zoos across the country, describing the move as a solution to the animals destroying crops.
But on Monday, Sri Lanka's Department of Wildlife Conservation (DWC) told the Court of Appeal that it had decided not to go ahead with the export and that the action filed by 30 wildlife and environmental activists could be terminated.
"A state attorney informed court on behalf of the DWC that no monkeys will be exported to China or elsewhere," a court official told AFP.
Wildlife enthusiasts welcomed the government's decision not to go ahead with the exports.
"This is an excellent outcome for wildlife conservation in Sri Lanka," they said in a brief statement.
The proposed sale to China came as it faced its worst-ever economic crisis. No financial details were made available.
Sri Lanka was forced to secure a bailout from the IMF in March this year after defaulting on its $46 billion foreign debt and declared bankrupcy in April last year.
Media reports had speculated that China may have wanted such large numbers of monkeys from Sri Lanka for medical research.
Monkeys are considered pests in Sri Lanka because they destroy crops and raid villages in search of food, and sometimes attack people.
Sri Lanka removed several species from a protected list this year, including all three of its monkey species as well as peacocks.
Toque macaques are officially estimated to number between two million and three million in Sri Lanka, but activists say the number may be highly exaggerated.
They argue that a key reason for increased human-animal conflict, including with monkeys and elephants, is agricultural expansion shrinking wild animal habitats.
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