"While we certainly would have liked a victory for workers here, we deeply respect the Volkswagen Global Group Works Council, Volkswagen management and IG Metall for doing their best to create a free and open atmosphere for workers to exercise their basic human right to form a union," said UAW President Bob King in a statement released after the vote.
The rejection is a major blow to the UAW which has never organized a foreign-brand auto plant operating in the U.S.
A yes vote would have also given the UAW representation of a final assembly plant in the southern U.S. where foreign automakers have set up facilities in right to work states.
"They (workers) have spoken, and Volkswagen will respect the decision of the majority," said Frank Fischer, CEO and Chairman of Volkswagen Chattanooga.
Blaming outside influence
During three days of voting, the UAW repeatedly complained of outsiders trying to influence and intimidate VW workers into voting against joining the union.
One specific complaint involves Tennessee Senator Bob Corker, a Republican, and vocal critic of the UAW.
During the vote, Corker said he had been told by people close to Volkswagen that the German automaker would not bring production of a new vehicle to Chattanooga if workers rejected the union offer.
Despite Volkswagen executives denying future product plans would be tied to the union vote, many wonder if Corker's claim spooked workers into voting no.
—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews.
Questions? Comments? BehindTheWheel@cnbc.com.