Da Silva, who was wildly popular as president in 2003- 2010 and has been leading the polls for October's presidential election, was defiant in the face of yesterday's court ruling.
The case alleged that while president, da Silva traded favors in return for the promise of a beachfront apartment.
It is just one of a series of graft allegations against him amid a mushrooming corruption scandal that has taken down top politicians and business executives in Latin America's largest nation.
His Workers' Party declared its intention to register him as its candidate in August and scheduled a meeting today to discuss plans.
"We will fight in defense of democracy in all forums, in the judiciary and mainly on the streets," party chairwoman Gleisi Hoffmann said in a statement. "If some think the story ends with today's decision, they are very wrong because we do not surrender before injustice."
That raised the specter of months of uncertainty ahead of the vote and even potentially unrest.
Under Brazilian law, a criminal conviction that has been upheld on appeal makes the person ineligible to run for office, although da Silva still has several avenues to still get on the October ballot by appealing to higher courts.
Ultimately, the country's Supreme Electoral Tribunal makes decisions about candidacies, and the Supreme Court could also weigh in on the case.
"We will have a difficult year, but I think in the end the election will take place and people will accept its results," he said on a conference call with reporters organized by the Wilson Institute in Washington.
In deeply polarized Brazil, the case is part of a larger narrative, with supporters and detractors of da Silva offering their own interpretations.
Da Silva and his supporters say the other corruption charges brought against him are an attempt to keep him from returning to office. They argue it is part of a conspiracy by Brazil's elite to keep out a president like da Silva who focuses on the poor and levels the playing field in one of the world's most unequal nations.
Tensions were high yesterday as the judges met in Porto Alegre, a southern city. Helicopters buzzed the skies, police patrolled on horses and sharpshooters took up positions outside while the judges spent the morning hearing arguments over da Silva's conviction on corruption and money laundering charges.
Prosecutors argued da Silva was promised a beachfront apartment, owned by construction company OAS, in exchange for contracts. In plea bargain testimony, the company's CEO said the apartment was slated for da Silva.
"Nobody can be absolved just because he's powerful," Judge Leandro Paulen said, referring to da Silva's large following.
Experts said da Silva was unlikely to be jailed while pursuing further appeals.
Over the last several years, the "Car Wash" corruption investigation has landed dozens of Brazil's elite, from businessmen to politicians, in jail.
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