The Court upheld the Commission's view that Ireland had not done enough to bring down the level of trihalomethanes (THMs) in drinking water.
THMs are found in water treatment systems that use chlorine to remove bacteria and may harm humans and the environment.
"The Court declares that Ireland has failed to fulfill its obligations under article 4 of (the Drinking Water) Directive 98/83," the Court said in a statement, adding Ireland had to pay the costs of the proceedings.
That directive requires member states to ensure that water intended for human consumption is wholesome and clean.
The Court said Ireland had failed to take measures "as soon as possible" to restore the quality of water intended for human consumption.
(Reporting by Philip Blenkinsop and Benoit Van Overstraeten; Editing by Christina Fincher)
