The decision came from Digital Cinema Media (DCM), which regulates promotional content for Odeon, Vue and Cineworld theatres.
The Church of England said the ban was "astonishing".
Last month, DCM was accused of hypocrisy after banning an ad featuring the Archbishop of Canterbury and others reciting the Lord's prayer, but allowing a short film featuring Hindu gods, as well as adverts about alcohol and violent video games.
ChurchAds.net, which produced the film, received the DCM's decision in an email.
Francis Goodwin, Chair of ChurchAds.net said: "This advert is very mild stuff; it beggars belief that anyone would want to ban it.
"We think we live in a liberal democracy where people can say what they like, and then we find out that we can't.
"Our aim is to gently remind people of why and what we celebrate at Christmas; and to do so in a contemporary and creative way."
The video shows a couple sitting by a fireplace with their newborn baby, as they gradually begin to resemble Mary, Joseph, and baby Jesus in the nativity scene.
The clip ends with the sounds of a baby and the tagline: 'Christmas starts with the power of love.'
A statement released by the DCM said: "The advertisement was declined on the grounds that it constitutes religious advertising.
"DCM has a long-standing policy of not accepting political or religious advertising in the cinemas we represent."
Listen to Premier's Aaron James speaking to Francis Goodwin on the News Hour: