A criminal court in Bursa, north-west Turkey, ruled that the Rainbow Association must shut down after claims by the local government that its members had engaged in prostitution.
However, the LGBT group denies the allegations and says that no illegal activity has taken place.
Rainbow Association president Öykü Evren Özen said his group would appeal the ruling.
He added that the group would continue operating during the appeal and would reform under a new name if unsuccessful.
According to the Gay Middle East website, the Bursa local government has been “harassing” the Rainbow Association since early 2007 and has previously denounced it as “immoral”.
The January 2nd ruling follows a lawsuit originally brought against the group in 2008.
Lawyer Esra Yener told English-language website bianet that even if Rainbow Association members were working as prostitutes outside the group, it would be contrary to the law to associate their activities with the organisation.
Gay Middle East pointed out that Turkey, as a member state of the Council of Europe and part of the United Nations, has signed both the European Convention on Human Rights and the International Covenant on Civil and Political Rights.
The website urged the Turkish government to quickly pass a bill to uphold the rights of LGBT people.
At least three other Turkish LGBT groups have fought legal challenges to stay open in the past six years.
In 2009, Lambda Istanbul was granted permission to continue operating after it was ordered to be dissolved the previous year.
Ankara-based group Kaos GL was ordered to close in 2005 by city deputy governor, Selahattin Ekmenoglu. The closure petition was dismissed by prosecutors.
Last year, The Black Pink Triangle Association of Izmir was taken to court after the city of Izmir accused it of immorality. It later won the right to stay open.