LA judge Fernando Olguin said Spencer Elden had waited too long to claim the band sexually exploited him, having sued more than 10 years after learning about the cover.
The defendants included Nirvana members Dave Grohl and Krist Novoselic, the late lead singer Kurt Cobain’s widow Courtney Love and photographer Kirk Weddle.
The lawsuit stemmed from a photo Mr Weddle took in 1991 of the nude baby swimming towards a dollar bill on a fish hook.
Mr Elden, who claimed the image was child porn, began his lawsuit in August 2021.
He claimed that the cover had caused him emotional distress, loss of earnings and “loss of enjoyment of life” that continued into adulthood.
The judge rejected that argument, saying it would effectively permit Elden to sue Nirvana indefinitely.
"In sum, plaintiff fails to allege that he knew of a violation that occurred while he was a minor or an injury that forms the basis of the claim within ten years of filing this action," Olguin wrote.
Bert Deixler, a lawyer for the defendants, said: "We are pleased that this meritless case has been brought to a speedy final conclusion."
Nevermind, which features the song "Smells Like Teen Spirit”, has sold more than 30 million copies worldwide.
