The case has been brought by the families of two activists who protested against oil exploration by Shell in the Ogoni region of Nigeria.
The Court rejected an appeal from the company which sought to have the proceedings ended.
The case has been brought by the families of two activists who protested against oil exploration by Shell in the Ogoni region of Nigeria.
The suit alleges that Shell took land without paying proper compensation, polluted the atmosphere and paid for local police to suppress opposition.
The execution of one of the activists, Ken Saro-Wiwa, on murder charges led to Nigeria's suspension in the Commonwealth.
Shell argument rejected
The Supreme Court rejected Shell's argument that US federal courts lack jurisdiction over alleged violations of international law that occur abroad.
The court did not give a reason for the decision, but does not have to.
Under US law, claims can be made against companies on human rights grounds.
Shell is the largest oil operator in Nigeria, with the oil coming from the Niger Delta providing most of Nigeria's export earnings and government income.
However, local Ogoni tribespeople feel they are getting nothing back and the imbalance is a major source of tension in the region.
Nigerian anger
Local anger was most famously mobilised by the late Mr Saro-Wiwa, but in all parts of the Delta protesters have blocked access roads, occupied production platforms and, on occasion, sabotaged pipelines.
Mr Saro-Wiwa and fellow activist John Kpuinen were repeatedly tortured and eventually hanged in 1995.
The suit alleges that Royal Dutch Petroleum Co and sister company Shell Transport and Trading Co fabricated evidence to support murder charges against the two men.
The latest Supreme Court decision confirms an earlier federal appeals court ruling.
The ruling said that a lower court judge had been wrong to accept Shell's assertion that the case belonged properly not in the United States but in Britain, where Shell is based.