An Bord Pleanála has overturned a decision by Cork County Council to grant permission for the construction of 72 houses in Ovens.
The Council granted permission for the development in Ballygroman Lower, Killumney last April.
However, this was appealed by a group of "concerned residents".
An Bord Pleanála refused permission because of the limited capacity of the Killumney/Ovens Wastewater Treatment Plant, and because increased strain on the Treatment Plant might have had a negative impact of the Cork Harbour Special Protected Area.