The 70-year-old nun, who has spent the majority of her life in a convent in Drôme, decided to retire back to her home region of Haute-Saône and applied for a place in a state-run care facility.
But bosses told her that due to France's tradition of secularism, she would only be given the place if she agreed to leave off wearing the full habit and head covering of her religious order, which she refused to do.
She was told she would be able to wear a discreet cross around her neck.
A spokesman for the local authority which manages the home said: “In respect of secularism, any ostentatious sign of belonging to a religious community cannot be accepted in order to ensure the serenity of all.”
The nun has since been housed by her local parish.
France has a strict principle of laïcité – secularism – which means that religious clothing cannot be worn in government buildings.
As well as care homes, this includes local government offices and schools.
The people who have more usually fallen foul of this rule are Muslim women who wear the hijab, or headscarf, but the principle applies to all religious clothing.
In a recent case, a mum who was accompanying her son's class on a school trip was ordered to remove her headscarf.
The French state and church were officially separated by law in 1905 to give form to the concept of secularism rooted in the 1789 French Revolution.
In 2004, the government prohibited the wearing of conspicuous religions symbols in public schools and banned the hijab – a garment that covers a woman's hair but leaves her face exposed – from classrooms and government offices.
The country with Europe's largest Muslim population is also deeply divided over the body-concealing “burkini” swimsuit, with opposition to the garment forcing the closure of some swimming pools earlier this year in the midst of a heatwave.
Also this year, French sports retailer Decathlon was forced by public pressure to back down from a plan to sell a runner's hijab in France.