It is the practice of executing people convicted of acts they committed when they were as young as 16 or 17 years old.
The move by the nine-member court comes as more than 70 such people await execution across the country.
Human rights campaigners are jubilant. They point out what they see as the damage done to the United States' reputation by the state-sanctioned killing of juveniles. The executive director of the Death Penalty Transformation Center, Richard Dieter, said in Washington.
"We are a country that does treasure human rights, we do encourage their development around the world, and in many areas we've been seen on the forefront of this," Dieter said. "But with things like the death penalty, I don't think that's true."
The United States has long been isolated internationally on the issue of capital punishment, and especially so on juvenile executions. Only a handful of countries have persisted in the practice, including Iran, China, Pakistan, and Saudi Arabia.
In a written explanation of the latest judgment, Justice Anthony Kennedy says it is proper to acknowledge the weight of international opinion against the death penalty for juveniles. He says it rests, in his words, "in large part on the understanding that the instability and emotional imbalance of young people may often be a factor in the crime."
Kennedy says the age of 18 is the point where U.S. society draws a line between childhood and adulthood, and thus it's the age at which it is appropriate to apply the death penalty.
The executive director of the U.S. National Coalition to Abolish the Death Penalty, Diann Rust-Tierney, agreed with the judge's reasoning.
"We're pleased that the Supreme Court said that if we're going to have the death penalty, it has to be reserved for the worst of the worst -- the crimes that are the most serious, and the people that are most culpable, and to date, juveniles have been found not to fall into that category," Rust-Tierney said. "Everybody knows kids are different and while they should be held accountable for their crimes, the death penalty just isn't appropriate."
Nevertheless, the death penalty is a hotly contested issue in the United States.
There was strong opposition to the Supreme Court's latest ruling among the justices themselves, as evidenced by its narrow, one-vote margin.
In his dissenting opinion, Justice Antonin Scalia describes the majority opinion as based on what he called the "flimsiest of grounds," and says it should be left to the individual states to decide the issue. In a sideswipe at international opinion, Scalia says it is not a question for the involvement of "foreigners."
Nineteen U.S. federal states allow juvenile death sentences, although in practice, only three states -- Oklahoma, Texas, and Virginia -- have executed such people in the past decade.
Conservative groups in the U.S. have also rejected the change. The president of one such group, Dianne Clements of the Texas-based Justice for All group, said she hopes that a strong death penalty advocate is nominated once a vacancy opens up on the Supreme Court.
The latest ruling builds on previous court decisions restricting the death penalty. U.S. courts in 1988 banned the execution of criminals who were 15 or younger when they committed their crimes. And in 2002, courts abolished the execution of the mentally retarded.
Opponents of capital punishment are hoping that the latest court decision -- further restricting the use of the ultimate punishment -- is a step that will eventually lead the way to the abolition of execution for all categories of citizens.