The case was brought by Gregory Holt, also known as Abdul Maalik Muhammad, who is serving a life sentence for a domestic violence conviction.
Holt, a Muslim, wants to be allowed to grow a 0.5-inch (one-centimeter long) beard -- twice as long as the 0.25-inch limit allowed under prison rules.
In the decision written by Justice Samuel Alito, the US high court said the prison restrictions violate Holt's constitutional rights to freedom of religion.
Prison officials, Alito wrote, have given the inmate the option of either "engaging in conduct that seriously violates his religious belief, or contravening the grooming policy and risking disciplinary action."
The court heard arguments in the case in October.
Forty of the 50 US states allow prisoners to wear a trim beard. Arkansas is among the 10 remaining states restricting that right, for security reasons.
The nine justices acknowledged the validity of prison officials' security concerns -- that inmates could hide weapons or other contraband inside their whiskers.
They noted however the "difficulty of hiding contraband in such a short beard" as the one worn by Holt.
The court also pointed out the inherent inconsistency of the prison's rules, since no policy regulates the length of head hair.
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