In a judgement expected to set a precedent, the State Council ruled that local authorities could only restrict individual liberties if there was a "proven risk" to public order.
The case before the court concerned the French Riviera resort of Villeneuve-Loubet, one of around 30 towns which have passed burkini bans.
Burkini gave women freedom, creator says
The French Council of the Muslim Faith (CFCM) hailed the ruling as "a victory for common sense".
Police have fined Muslim women for wearing burkinis on beaches in towns including in the renowned Riviera resorts of Nice and Cannes.
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