"The House of Representatives rejects the verdict under these conditions and says it is still functioning, as is the government," lawmaker Adam Abu Sakhra said, reading from a prepared statement.
The internationally recognised legislature said it was elected on June 25 by the people in "free and credible" polls and therefore would not disband, Abu Sakhra said on Libya Awalan television.
It charged that the ruling announced earlier today by the Tripoli-based supreme court was taken "under the threat of arms" because the capital is "ruled by outlawed militias".
Supreme court chief Kamal al-Dahan said the verdict -- in response to a petition by an Islamist lawmaker -- cannot be appealed and effectively nullifies all decisions that result from the June poll.
That ruling could plunge Libya into further chaos and violence and cement the divide between Islamists and nationalist militias and their political backers vying for power in the oil-rich North African country.
The court ruling prompted celebratory gunfire in Tripoli, an AFP correspondent said.
Most of Tripoli, like second city Benghazi in the east, fell under the control of Islamist militias after fierce fighting in the summer.
Three years after dictator Moamer Kadhafi was ousted and killed in a 2011 NATO-backed revolt, Libya is awash with weapons and powerful militias and run by rival governments and parliaments.
The UN mission in Libya, which has been trying to broker a political deal to end the violence, said it would study the court ruling closely.
In a statement, it called on all sides "to act responsibly and desist from taking any action that would escalate the existing polarisation or result in a further deterioration of the security situation".