"Today's ruling appropriately bars the state of Arizona from effectively criminalizing unlawful status in the state and confirms the federal government's exclusive authority to regulate in the area of immigration," Attorney General Eric Holder said in a statement.
But Texas Rep. Lamar Smith, the Republican chairman of the House Judiciary Committee, said Monday's ruling "essentially puts an end to immigration enforcement since the states no longer can step in and fill the void created by the Obama administration."
The high court majority in the case included Kennedy, Chief Justice John Roberts, Justice Steven Breyer, Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor. Justice Elena Kagan did not hear the case. Before taking the bench last year, she had been involved in the administration's initial legal opposition to the law as solicitor general.
Justice Antonin Scalia, writing for the minority, argued the court's ruling encroaches on Arizona's sovereign powers.
"If securing its territory in this fashion is not within the power of Arizona, we should cease referring to it as a sovereign State," Scalia wrote in a dissent backed by Justices Samuel Alito and Clarence Thomas.
Supporters of the Arizona measure contend the federal government has failed to enforce existing immigration laws, leaving it to states to take their own steps to deal with mounting economic and social problems caused by illegal immigrants.
On Monday, two senior administration officials said the Department of Homeland Security expects increased requests from Arizona police to check the immigration status of suspects. However, they said the department will get involved only in high-priority cases such as felony offenders, repeat immigration violators or newly arrived illegal immigrants.
The policy reflects the department's policy of prioritizing how it spends its resources, the officials said. Such prioritizing of resources was cited as the basis for a recent decision to halt deportations of some young illegal immigrants who came to America as children, had clean records and were students or served in the military.
In his dissent, Scalia noted such selective enforcement of immigration laws, writing, "To say, as the Court does, that Arizona contradicts federal law by enforcing applications of the Immigration Act that the President declines to enforce boggles the mind."
Several other states followed Arizona's lead by passing laws meant to deter illegal immigrants. Similar laws are under challenge in lower courts in Georgia, Alabama, Utah, Indiana and South Carolina. Arizona's appeal is the first to reach the Supreme Court.
"Hopefully today's decision will spur the federal government to enforce the rule of law in the immigration arena," said a statement by Alabama Attorney General Luther Strange. "My office will be reviewing today's decision to determine the full extent of its impact on Alabama's law and the pending litigation."
Dan Kowalski, editor-in-chief of Bender's Immigration Bulletin and an immigration lawyer at the Fowler Law Firm in Austin, Texas, said Monday's ruling means states have to "really almost go back to square one and really rethink their approach and how much time and money they want to put into these types of statutes."
"They're going to have to spend a lot of money on lawyers to try to craft something that they think can withstand Supreme Court scrutiny," he said, adding that states also will "have to budget money for further litigation because, no matter what they propose on a state level, it's going to be challenged. That costs a lot of money. So they're going to have to figure out if it's worth it."
Fed up with illegal immigrants crossing from Mexico -- and what they say is the federal government's inability to stop it -- legislators in Arizona passed the tough immigration law in 2010. The federal government sued, saying that Arizona overreached.
At issue was whether states have any authority to step in to regulate immigration matters or whether that is the exclusive role of the federal government. In dry legal terms, this constitutional issue is known as pre-emption.
Arizona is the nation's most heavily traveled corridor for illegal immigration and smuggling.
The case reached the Supreme Court after federal courts had blocked four elements of the state's Support Our Law Enforcement and Safe Neighborhoods Act, known as SB 1070.
The Justice Department said Arizona's population of 2 million Latinos includes an estimated 400,000 there illegally, and 60% to 70% of deportations or "removals" involve Mexican nationals.
The Pew Hispanic Center recently issued a report that found that Mexican immigration to the United States has come to a standstill.
The economic downturn in the United States and better conditions in Mexico, along with deportations and other enforcement, have led many to return to Mexico.
However, the debate continues as more than 10 million unauthorized immigrants -- from Mexico and other countries -- continue to live in the United States.
The Obama administration said Monday that it has increased both Border Patrol and Immigration and Customs Enforcement staffing and taken other steps that helped cut border apprehensions in half since 2008.
Even if immigration has slowed to lows not seen in decades, proponents of tough immigration laws want to beef up enforcement ahead of any future pressures.