The extradition request was sent by Home Secretary Priti Patel earlier this month for Anne Sacoolas, metro.co.uk reported.
Reacting to the development, a spokeswoman for the UK Home Office said on Thursday: "We are disappointed in this decision which appears to be a denial of justice. We are urgently considering our options."
Harry Dunn, 19, died in a hospital of multiple injuries from the head-on crash of his motorbike with a car on August 27, 2019 in Northamptonshire in the East Midlands of England.
The US State Department had confirmed that the driver Sacoolas, 42, was the spouse of an American diplomat assigned to Britain, who then left the UK using her diplomatic immunity.
Also on Thursday, the family's spokesperson, Radd Seiger, said that their constituency MP Andrea Leadsom will meet US Ambassador Woody Johnson in London on Friday to discuss the case.
Over the last four months, the family has launched a number of legal battles, including a judicial review against the Foreign Office, a referral of Northamptonshire Police to the Independent Office for Police Conduct and an investigation into the US administration's handling of the case and a civil claim against Sacoolas herself.
They even met US President Donald Trump at the White House to state their case for Sacoolas returning to the UK.
( With inputs from IANS )