The High Court of Australia decision means three of the politicians, including Mr Joyce, are disqualified from office. The others quit in July.
Australia's constitution prohibits dual citizens from being elected.
Mr Joyce's exit strips the government of its one-seat majority, but he could return through a by-election.
The deputy prime minister, who renounced New Zealand citizenship in August, has pledged to re-contest his lower house seat.
"I respect the verdict of the court," Mr Joyce said immediately after the verdict.
"We live in a marvellous democracy, with all the checks and balances they have given us all the freedoms we see. I thank the court [for] their deliberations."
The other four politicians - Fiona Nash, Malcolm Roberts, Larissa Waters and Scott Ludlam - had been elected to the Senate.
Another two politicians under scrutiny, senators Matt Canavan and Nick Xenophon, were ruled to have been validly elected.
The dual citizenship saga has captivated Australian politics since July, prompting dozens of MPs to publicly clarify their status.
