Smith, a former model, spokeswoman and reality TV star, died in February 2007 of an accidental prescription drug overdose.
Howard K. Stern, the executor of her estate, filed papers in Supreme Court in October of last year seeking to clarify Smith's intentions in the will she drafted five years before Dannielynn was born.
"We and Mr. Stern always believed that Anna Nicole never intended to disinherit her daughter," People.com quoted Stern's attorney, Bruce S. Ross, as saying after Tuesday's hearing. "I'm pleased to say this chapter in the saga is closed."
The judge also ruled that a trust be established on the 18-month-old girl's behalf with Stern and Larry Birkhead, Dannielynn's father, as its co-trustees, the magazine said.
Notable deaths of 2014 [PHOTOS]
Reports: Mila Kunis gives birth to baby girl