Deputies on Wednesday voted 42 to 19 to turn down Daniel-Gerard Rouzier for the post of PM. Those against argued that there could be a possible conflict of interest as Rouzier runs companies that have government contracts.
Martelly said he was disappointed by the decision but he would accept it.
The two chambers of parliament are dominated by the Inite party, which backed Martelly’s rival for the presidency.
The former Kompa singer, who took office in May as Haiti’s new head of state, will have to now present a new nominee that could take several weeks.