From the BBC: http://news.bbc.co.uk/2/hi/americas/7474924.stm
In a 5-4 decision, the justices upheld a lower court ruling striking down the ban. They said individuals had a right to keep handguns for lawful purposes.
It is the first such case considered by the court in decades and is expected to have effects on gun laws across the US.
Debate over the exact meaning of the constitutional right to keep and bear
arms has raged for years.
The latest ruling says that the constitution "protects an individual right to possess a firearm unconnected with service in a militia, and to use that arm for traditionally lawful purposes, such as self-defense within the home".
The BBC's Justin Webb in Washington says the ruling is of profound importance, as it enshrines for the first time the individual right to own guns and limits efforts to reduce their role in American life.
Since 1976, the private possession of handguns had been prohibited in the nation's capital, while rifles and shotguns had been required to be locked away or dismantled.
The DC city council argued that the ban was needed to help keep violence and murder rates down.
But the measure was challenged by a security guard, Dick Heller.
He argued that if he was allowed to have a handgun at work, he also had a constitutional right to have one at home.
Friends of the court
In March last year, a federal appeals court agreed with Mr Heller that the Second Amendment protected an individual's right to keep and bear arms and that the DC ban was unconstitutional.
The city appealed against that ruling, with the case going to the Supreme Court.
The debate centred on whether the Second Amendment, ratified in 1791, protects an individual's right to possess guns, or simply a collective right for an armed militia.
The Bush administration welcomed the court's decision.
"We're pleased that the Supreme Court affirmed that the Second Amendment protects the right of Americans to keep and bear arms," White House spokesman Tony Fratto said.
The case has been closely watched, with dozens of outside groups filing opinions, known as "friends of the court" briefs, setting out their arguments for or against the DC ban.
The Supreme Court's ruling could spark challenges to gun control laws in other parts of the US, experts say.
The Brady Campaign to Prevent Gun Violence - which supports gun control - said the decision would "most likely embolden criminal defendants, and ideological extremists, to file new legal attacks on existing gun laws".
New York Mayor Michael Bloomberg said the ruling would not affect the work of his coalition, Mayors Against Illegal Guns, which advocates stricter gun laws.
"The court clearly ruled that reasonable regulations are permitted under that decision," he said.
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