The court, which sits in Strasbourg, France, ruled in an appeal by a Finnish immigrant to Italy, the Italian news agency ANSA reported. Soile Lautsi, who is an Italian citizen and lives near Padua, had lost in Italian courts when she asked for the removal of crosses from classrooms in her children's schools.
The Italian government must pay Lautsi 5,000 euros ($7,350) in "moral damages," the court said.
The Vatican refused immediate comment on the decision, with officials saying they had not seen the ruling.
''I believe reflection is needed before commenting,'' said the Rev. Federico Lombardi, a spokesman for the Catholic Church.
Conservative politicians in Italy denounced the decision. Education Minister Mariastella Gelmini called classroom crucifixes ''a symbol of Italian tradition," not a Christian one.
Under current Italian law, local governments can decide whether to hang crucifixes in public buildings.