The board of the U.S.-based Internet Corporation of Assigned Names and Numbers (ICANN)to dismiss the application to register the domain name, which would be like the .com or .net at the end of an Internet address.
Supporters said a .xxx domain would have made it easier to confine sex sites or filter them out, but critics such as the Family Research Council, a conservative U.S.-based religious group, complained it would only legitimize the porn industry.
The EU executive said the decision underscored the need to make ICANN independent quickly, following unsuccessful demands last year by a group of countries including the EU to make ICANN fully independent.
"We see here a first clear case of political interference in ICANN," said Martin Selmayr, spokesman for EU Information Society and Media Commissioner, Viviane Reding.
He said correspondence between ICANN and the U.S. Department of Commerce highlighted the "interference."
ICANN, a California-based nonprofit group, cannot make changes to the domain-name system without the approval of the U.S. Commerce Department.
"It's a worrying development that the U.S. administration has interfered in this process," Selmayr said.
He urged further steps to complete the privatization of ICANN in the course of this year to release it from the oversight of the Department of Commerce.
ICANN said in a statement on Wednesday that its discussion had focused on issues such as sponsorship, compliance issues and public policy concerns.
The .xxx application was seen as a test case of ICANN's independence.
At a summit in Tunis last November, the United States fought off attempts to wrest control of the domain-name system from the Commerce Department.
Thehad become a sticking point for countries like Iran and Brazil, who argued that it should be managed by the United Nations or some other global body.
The United States argued that such a body would stifle innovation with red tape.