The 6-3 ruling, with the court's conservative justices in the majority and progressive justices in dissent, struck down New York state's limits on carrying concealed handguns outside the home.
The court found that the law, enacted in 1913, violated a person's right to "keep and bear arms" under the US constitution's Second Amendment.
The ruling, authored by Justice Clarence Thomas, declared that the constitution protects "an individual's right to carry a handgun for self-defence outside the home".
Thomas added: "We know of no other constitutional right that an individual may exercise only after demonstrating to government officers some special need."
The New York restriction is unconstitutional because it "prevents law-abiding citizens with ordinary self-defence needs from exercising their right to keep and bear arms," Thomas added.
The justices overturned a lower court ruling throwing out a challenge to the law by two gun owners and the New York affiliate of the National Rifle Association, an influential gun rights group closely aligned with Republicans.
The decision represents the court's most important statement on gun rights in more than a decade.
The court in 2008 recognised for the first time an individual's right to keep guns at home for self-defence in a case from the District of Columbia, and in 2010 applied that right to the states.
The new ruling underscored how the 6-3 conservative majority on the court is sympathetic to an expansive reading of Second Amendment rights.
Under the New York law's "proper cause" requirement, applicants seeking an unrestricted concealed carry permits must convince a state firearms licensing officer of an actual, rather than speculative, need for self-defence.
Officials could also grant licences restricted to certain activities, such as hunting or target practice.
The ruling could lead to many more people securing the licences to carry concealed handguns in the state, undermine similar restrictions in other states and imperil other types of state and local firearms restrictions country-wide by requiring judges to scrutinise them with a more skeptical eye under the US constitution.
The ruling said that New York's concealed firearm regime is at odds with the text and history of the Second Amendment and how gun rights were protected throughout US history.
Firearms safety groups and gun control activists feared that a sweeping ruling against New York could undermine gun measures such as "red flag" laws targeting the firearms of people deemed dangerous by the courts, expanded criminal background checks for gun buyers or restrictions on selling untraceable "ghost" guns assembled from components purchased online.
They also feared that such ruling could jeopardise bans on guns in sensitive places such as airports, courthouses, hospitals and schools.
The US Senate is poised later on Thursday for a vote to advance a bipartisan gun control bill that supporters hope will help curb mass shootings in what could become the first new federal gun law in decades.
Eight US states including New York empower officials to decide whether people can carry concealed handguns in public even if they pass criteria such as criminal background checks.
Gun rights, held dear by many in the US and promised by its 18th century founders, are a contentious issue in a country with high levels of firearms violence including numerous mass shootings.
US President Joe Biden's administration backed New York in the case.
In a concurring opinion, Justice Samuel Alito downplayed the scope of the ruling, adding the court was saying "nothing about who may lawfully possess a firearm or the requirements that must be met to buy a gun. Nor does it decide anything about the kinds of weapons that people may possess".