Judges at the International Criminal Court found it has jurisdiction over war crimes committed in Palestinian territories on Friday (February 5).
The decision paves the way for possible criminal investigations.
It was quickly criticized by Israel - which is not a member of the court - and welcomed by the Palestinian Authority.
It comes just over a year after ICC Prosecutor Fatou Bensouda said she found that, quote, "war crimes have been or are being committed in the West Bank, including East Jerusalem, and the Gaza Strip," naming both the Israeli Defense Forces and armed Palestinian groups such as Hamas as possible perpetrators.
She said then that she saw no reason not to open an investigation - but first asked judges to rule on whether the situation fell under the court's jurisdiction.
The judges said the jurisdiction decision does not imply any attempt to determine Palestinian statehood.
Israeli Prime Minister Benjamin Netanyahu denounced the move:
"When the ICC investigates Israel for fake war crimes, this is pure antisemitism."
Palestinian Foreign Minister Riyad al-Malki said Israel has always been treated above the law.
"There is no accountability when it comes to Israel. // Today, the United States of America cannot do anything to protect Israel and as a result Israel has to be treated as a war criminal."
Israeli settlements in the occupied West Bank are one of the most heated issues in the Israeli-Palestinian conflict.
The Palestinians want the West Bank, captured by Israel in the 1967 Middle East war, for part of a future state.