Chapman, 57, is serving a prison sentence of 20 years to life for shooting Lennon four times in the back outside the musician's New York City apartment building on December 8, 1980. He pleaded guilty to second-degree murder.
Chapman has come up for parole every two years since 2000 and has been turned down each time.
"Despite your positive efforts while incarcerated, your release at this time would greatly undermine respect for the law and tend to trivialise the tragic loss of life which you caused as a result of this heinous, unprovoked, violent, cold and calculated crime," parole board member Sally Thompson wrote to Chapman, the department said in a statement.
A parole board hearing on Chapman was held earlier this week at Wende Correctional Facility, a maximum-security prison in Alden, New York, where he is being held, the department said.
Lennon's widow, Yoko Ono, remained steadfast in her objection to parole for her husband's killer, who she has said in the past posed a risk to her, Lennon's two sons, the public and himself.
"Mrs. Lennon's position remains consistent with the prior letters," said Ono's attorney, Jonas Herbsman, in an e-mail.
In a 2000 letter to the parole board, Ono said Chapman's release would be a betrayal of justice and encourage others who feel inclined to murder celebrities to gain attention.
"If it is at all possible, I would like us not to create a situation which may bring further madness and tragedy to the world," she wrote.
Herbsman said Ono would not be commenting on the 2012 parole board's decision. Chapman was transferred in May to Wende from Attica Correctional Facility, the maximum-security penitentiary in Attica, New York, where he had been held for 31 years.
A corrections spokesman said at the time Chapman was placed in protective custody at Wende, but the reason was not made public. Wende is in western New York, east of Buffalo.