The court ruled 10-1 that the Raposa Serra do Sol reservation must be maintained as a single, continuous territory, the BBC reported Friday.
The ruling is viewed as protecting Brazil's entire indigenous population not just those who live at Raposa Serra do Sol.
"We've established a statute that has to be applied not only in the Raposa Serra do Sol case but also in other cases of demarcation," said Gilmar Mendes, president of the high court.
Mendes criticized the Brazilian government for what he called the neglect of the indigenous community.
Raposa Serra do Sol was established in 2005 as an area exclusively for the use of the local Indian population.
Rice farmers who set up plantations on the reservation will now have to leave.