Uefa's executive will not allow their congress to discuss Jersey's bid as the island is not recognised by the United Nations as an independent nation.
Representatives from Uefa visited the island, which is a crown dependency of Great Britain, in September to meet with Jersey football officials.
"This was the response we expected," said Jersey FA president Phil Austin.
"From a footballing perspective we more than meet the criteria.
"In rejecting our application, the executive of Uefa have said that they're not putting our application forward to the congress. We don't think the executive have the authority to do that, we think it should go to congress," Austin told BBC Sport.
Jersey submitted a bid to leave the English FA and join Uefa in December 2015, following the acceptance of Gibraltar and Kosovo, who are not independent nations.
But Gibraltar's initial application in 2007 came before the rules were changed, while Kosovo, who joined Uefa in May and played in their first World Cup qualifier in September declared independence from Serbia in 2008.
"I have no idea how long it's going to take, we are waiting for a court date hopefully within the next six months, but I don't know," added Austin.
"We are watching the costs very carefully and we will take it each step at a time and managed our budget accordingly.
"One or two people have stepped forward who believe in what we're doing and will help us with our funding."

Chase, who was mid-way through a four-year deal at the end of this season, was revealed as a 2016 signing by Leigh on BBC Radio Manchester, although the deal has not been formalised to date.
The 29-year-old had already been granted a free transfer by Salford.
He was suspended internally by the club in September pending the hearing.
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The 2011 Man of Steel, who missed the final four games of the season because of that suspension, joined the Red Devils from Castleford for 2014 and scored seven tries in 17 league games in 2015.
The New Zealand-born half-back qualified for England on residential grounds in 2011 and has since gone on to win 11 caps, but has not featured since losing his place to Gareth Widdop for the 2013 World Cup semi-final defeat by the Kiwis.
Chase was banned for seven matches in April for a dangerous throw on Huddersfield forward Brett Ferres, but also showed off his skills during the campaign, notably with an assist for a Josh Griffin try against Hull FC.
Jersey are to appeal to the Court of Arbitration for Sport (CAS) after their bid to join Uefa was turned down.
[NEXT_CONCEPT]
England playmaker Rangi Chase has had his contract terminated by Super League side Salford Red Devils following a 'disciplinary procedure'.