Donegal County Council had already refused the committee permission to demolish the iconic building but that decision was appealed to An Bord Pleanala.
The planning appeals authority has this week ordered that the building stay.
An application lodged in October 2015 by the local Butt Hall Committee to have the landmark demolished was met with heavy criticism by some, sparking an online petition which gained hundreds of signatures.
This week the aim of that petition has been achieved.
An Bord Pleanala refused permission for the old cinema to be demolished on a number of grounds including that its the only known commission of Belfast architect John McBride Neill in the country - meaning it is of regional importance representing both architectural and social value.
The board says the structure represents a rare example of its type and date in Donegal and is an integral part of the architectural heritage of Ballybofey, adding character and variety to the streetscape.
The board also concluded that demolishing the Ritz Cinema would be contrary to the proper planning and sustainable development of the area.
It now remains to be seen what will become of the structure which is in a poor and arguably unsafe state of repare.