Plans for 12 houses by the Marquis of Granby pub in Waddingham have been declined by West Lindsey District Council.
Nearby residents complained the planned homes were too close together and had poor access.
Pub operators Punch Taverns says it is considering “all options” on its future.
The pub has been closed in the past but re-opened last December.
The Rasen Mail understands the current landlord is keen to keep the pub open.