The judges voted with a clear majority to endorse President Rodrigo Duterte's decision to allow the burial at the "Cemetery of Heroes" in Manila, court spokesman Theodore Te told reporters.
"There is no law that prohibits the burial," Te said as he read a summary of the verdict and hundreds of Marcos supporters outside the court cheered.
Marcos ruled the Philippines for two decades until 1986, when millions of people took to the streets in a "People Power" revolution that forced him and his family into US exile.
Marcos, his infamously flamboyant wife, Imelda, and their cronies plundered up to $10 billion from state coffers during his rule, according to government investigators and historians.
The dictator also oversaw widespread human rights abuses to maintain his control of the country and enable his plundering, with thousands of people killed and tortured, previous Philippine governments said.
Anti-corruption watchdog Transparency International in 2004 named Marcos the second most corrupt leader of all time.
Marcos died in Hawaii in 1989 and his family had since tried to have him buried at the heroes' cemetery, where other presidents and celebrated military figures are interned.
The family has enjoyed a remarkable political comeback that saw his son and namesake, Ferdinand "Bongbong" Marcos, become a senator, then almost win the vice presidency this year.
However previous presidents had refused to allow the burial because of Marcos's crimes, and the preserved body had been kept in a glass casket at his home in the northern province of Ilocos Norte.
The family's fortunes changed with the election of Duterte, a longtime ally of the Marcos family, as president in May this year.
He said Marcos deserved to be buried at the heroes' cemetery based simply on the fact he had been a president and a veteran of World War II.