By a 7-2 vote, the court says the state may use a primary system that allows the top two vote-getters to advance to the general election, even if they are from the same party.
Washington never held a primary under the new system because of legal challenges.
Writing for the majority, Justice Clarence Thomas said that overturning Washington's plan would have been an "extraordinary and precipitous nullification of the will of the people."
In dissent, Justice Antonin Scalia said Washington's system would cause a political party to be associated with candidates who may not represent its views. Scalia was joined by Justice Anthony Kennedy.
Lawyers for the political parties said David Duke has identified himself as a Republican, despite GOP repudiation of his racial views, while perennial presidential candidate Lyndon LaRouche has called himself a Democrat, despite wide disagreement with Democratic leaders.
Under Washington's system, all candidates for a particular office may list their political party preference after their names.
The top-two plan was created after state voters approved a law in 2004 allowing them to pick their favorite candidate for each office. The top two vote-getters would advance to the November general election, even if they are from the same party.
The major parties challenged the law in federal court, asserting a First Amendment right to select their own nominees without outside interference.
A federal judge and the 9th U.S. Circuit Court of Appeals in San Francisco struck down the election plan.
Washington state Attorney General Rob McKenna argued there was no evidence that the parties would be harmed, since they can publicize through advertising and other means which candidates they support.
Tuesday's decision is the second of two this year on the rights of political parties. In New York, the justices said the state's method of electing trial judges, which gives party bosses effective control of the process, does not violate the Constitution.