Wallenberg's relatives have been hoping that the documents would finally clarify what happened to the Swedish diplomat, after he was arrested by Soviet troops in Budapest in 1945.
In the court hearing on Monday, the FSB, which took over the archives from the KGB, argued that the documents may include private details about other prisoners in the Lubjanka-prison in Moscow, where he is said to have been taken after his arrest.
The documents are from 1947 when Wallenberg according to Russian authorities died in prison. Unless the lawyers obtain consent from all the descendants of the other prisoners, the documents can only be made available after an official 75-year waiting period has passed, which would mean in 2022, the FSB said.
"You can wait for these deadlines," the FSB representative Sergei Churikov told the family's lawyers, reports news agency AFP.
On Monday evening, the judge at the Meshchansky district court ruled in favour of FSB and decided to reject the plea to release the full archives.
Lawyer Daria Sukhikh told Radio Sweden that they are now waiting to get the court's verbal ruling in writing, so they can formally appeal.
"Of course want to make an appeal, because we don't agree with this decision," she said.
The legal team dismisses the argument that the documents would reveal private details about other prisoners.
"This register contains information about different prisoners, but just simple information, like their names, date of interrogations, date of their appearance in prison, and date of them leaving prison. So this information is not connected with their private lives," said Daria Sukhikh.
The family of Raoul Wallenberg has already been waiting for a long time to find out what happened to him. Would five more years make such a big difference? Well, yes, says Daria Sukhikh, and reminds that he has elderly family members who have not got that much time left. For example, his sister Nina Lagergren turned 96 years old, earlier this year.
"They have already waited for a long time, so they have the full right to know the truth now," said Daria Sukhikh, lawyer of the relatives of Raoul Wallenberg.
Wallenberg served as Sweden's special envoy in Budapest during the tail end of World War II. He used his diplomatic privileges to save Jews from deportation to concentration camps by issuing them travel passes or Swedish passports.
In 1957, the Soviet Union said Wallenberg died of a heart attack. In 1991, a Russian government investigator said he was executed in 1947 inside a Soviet prison. However, no evidence was ever produced proving this.