Mayor Michael Bloomberg had pushed for the ban on sales of surgery drinks larger than 16 ounces as a health measure, and his appointed city Board of Health issued the regulation, bypassing the City Council.
The regulation was supposed to have been implemented in March, and applied to sales in theaters, restaurants and stadiums.
Challengers led by the American Beverage Association filed suit, and lower courts found the ban arbitrary.
Reacting to the state high court's acceptance of the appeal, Bloomberg said the debate was over a "health issue."
"Obesity is the only major public health issue we face that is getting worse, and sugary drinks are a major driver of the crisis," Bloomberg said in a statement issued Thursday, Politicker.com reported. He added obesity and diabetes are killing at least 5,000 city residents each year, striking hardest in low-income neighborhoods.
The "portion cap rule" would help save lives, Bloomberg said.
No word on when the New York Court of Appeals will hear the case.