The court upheld a local judge's 2007 ruling but said same-sex marriages could not be performed for three weeks, The Des Moines Register reported.
Iowa is one of three states where same-sex marriages are now legal. Courts in Massachusetts and Connecticut previously ruled that laws against same-sex marriage were unconstitutional.
Shelly Wolfe, 38, and Melisa Keeton, 31, of Des Moines immediately began arranging their wedding. The couple, who heard the decision outside the Recorder's Office in Polk County, have already celebrated their union with a commitment ceremony.
"We're going to make it legal," Keeton said.
Conservatives began a campaign for a constitutional amendment like California's Proposition 8 that would reverse the decision. Chuck Hurley, head of the Iowa Family Policy Center, and the Rev. Keith Ratliffe, a Baptist minister, waited for the decision at the Supreme Court and then marched with about 20 followers to the State House.
Rep. Steve King, R-Iowa, issued a statement calling the ruling unconstitutional and "another example of activist judges molding the Constitution to achieve their personal political ends."
"If judges believe the Iowa Legislature should grant same sex marriage," King said, "they should resign from their positions and run for office, not legislate from the bench."
Supreme Court Justice Mark Cady, who wrote the unanimous decision, was appointed to the court in 1998 by former Republican Gov. Terry Branstad.
King called on Iowa lawmakers to enact legislation to advance a constitutional amendment banning gay marriage, and to enact residency requirements so Iowa "does not become the gay marriage Mecca."
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