Kosovo's declaration of independence from Serbia in 2008 did not break international law, top UN judges have ruled in a non-binding decision.
The International Court of Justice rejected Serbian claims that the move had violated its territorial integrity.
Kosovo officials said all doubt about its status had now been removed, but Serbia's president insisted Belgrade would never recognise the secession.
The US and many EU countries support independence; Russia is opposed.
Addressing the court in The Hague, ICJ president Hisashi Owada said international law contained "no applicable prohibition" of Kosovo's declaration of independence.
"Accordingly, [the court] concludes that the declaration of independence on 17 February 2008 did not violate general international law," he said.
Ten of the ICJ's judges supported the opinion; four opposed it.
The judges said their ruling was restricted to the secession declaration itself and did not address the wider issue of Kosovo independence.
The US welcomed the ruling and urged European nations to unite behind it.
Kosovo President Fatmir Sejdiu called for wider international recognition for his state.
"The decision finally removes all doubts that countries which still do not recognise the republic of Kosovo could have," he said.
He also urged Serbian President Boris Tadic to change his attitude towards Kosovo.
But Mr Tadic told reporters: "Serbia will never recognise the unilaterally proclaimed independence of Kosovo."
The BBC's Mark Lowen in Belgrade says it is unlikely that Serbia will soften its approach, but there will be increasing pressure from the international community for Serbia to drop its aim of fresh talks on Kosovo's status.
Earlier, Nato commanders said the 10,000-strong peacekeeping force in Kosovo was ready to deal with any violence sparked by the ruling.
Serbian troops were driven out of Kosovo in 1999 after a Nato bombing campaign aimed at halting the violent repression of the province's ethnic Albanians, who constituted 90% of its two million population.
Kosovo was then administered by the UN until February 2008, when its parliament voted to declare independence.
So far, 69 of the UN's 192 member countries have recognised Kosovo as independent - they include the US, UK, neighbouring Albania and Croatia.
Those opposed include Russia, China and Bosnia. EU nations with separatist movements of their own - including Spain and Greece - have also not recognised Kosovo.
At the start of the deliberations last December, Serbia's representatives argued that the declaration of independence both challenged its sovereignty and undermined international law.
Kosovo's representatives warned that any attempt to reverse its independence might spark further conflict.
Although non-binding, the court's ruling is likely to provide a framework for diplomats to try to establish a working relationship between Serbia and Kosovo.
The dispute remains an obstacle to Serbia's hopes of joining the EU, and has hindered Kosovo's ability to attract foreign investment. Parts of northern Kosovo also remain tensely divided between ethnic Albanians and Serbs, and clashes occasionally erupt.