A lower court had barred the sale of the modified alfalfa seeds until an environmental impact study could be carried out.
But seven of the nine Supreme Court Justices decided that ruling was unconstitutional.
The ruling does not immediately clear farmers to plant the genetically engineered seed, but it could allow the US Department of Agriculture to permit the interim planting of Roundup Ready alfalfa with some restrictions while the agency completes an environmental study.
The seed is modified to be resistant to Monsanto’s brand of weedkiller. Alfalfa (Medicago sativa, also know as lucerne) is the fourth most valuable crop grown in the US.
Cross pollination
Environmentalists had argued that there might be a risk of cross-pollination between genetically modified plants and neighbouring crops.
They also argued over-use of the company’s weedkiller Roundup, the chemical treatment the alfalfa is modified to be resistant to, could cause pollution of ground water and lead to resistant "super-weeds".
But Monsanto says claims its products were dangerous amounted to "bad science fiction with no support on the record".