Paris councillors have rejected a motion targeting a business where clients are charged €89 ($109; £78) to spend an hour with a silicone sex doll.
Communist councillors and feminist groups had called on the Council of Paris - the body responsible for governing the city - to study the possibilities of closing Xdolls.
They argued it was demeaning to women - and effectively a brothel.
Owning or operating a brothel is illegal in France.
But police visited the establishment before the council meeting and declared no laws were being broken.
In a joint statement, Communist councillors Nicolas Bonnet Oulaldj and Hervé Bégué said they deeply regretted the council's decision.
"This establishment, with hyper-realistic humanoid dolls, is the latest invention to bring brothels back into the landscape," they said.
They went on to describe Xdolls as "the pinnacle of the dehumanisation of the relationship between women and men" and accused it of trivialising the exploitation of women by prostitution networks, and the related crime of human trafficking.
Xdolls is located in an anonymous-looking flat in the French capital and opened earlier this year, describing itself as a "games centre".
Clients are mainly men, though some couples also visit, owner Joachim Lousquy, who formerly managed e-cigarette shops, told Le Parisien newspaper.
It has three rooms, each containing a silicone sex doll measuring about 1m 45cm (4ft 7in) and worth several thousand euros.
Customers make their booking and payment online, and the exact address is kept secret. Not even the neighbours are aware of the nature of the business, Mr Lousquy says.
Mr Lousquy says the dolls are sex toys and that he does not see them as degrading to women.