The decision on Monday means Cook can remain in her post while legal proceedings over her position continue in a lower court.
The justices based their decision largely on the finding that Cook had not been given a sufficient opportunity to respond to the allegations against her before Trump moved to dismiss her.
The majority also pointed to the more than 200-year US tradition of a central bank independent of political influence, saying that independence was crucial for confidence in monetary policy and financial stability.
Cook welcomed the court's decision, saying it affirms the Fed's obligation to make policy decisions independently, free from political interference.
"This was never about mortgage documents signed years before I became a Federal Reserve governor. It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people," Cook said.
Trump reacted to the decision in a social media ​post.
"The Cook Lawsuit, having to do with her suitability in sitting on the Board of the Federal Reserve, was sent back by the Supreme Court on a strictly procedural basis, we will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!" Trump wrote.
Since taking office, Trump has taken drastic steps against the US central bank, fuelling concerns about its independence.
He has demanded that monetary policymakers lower interest rates to stimulate the economy.
Former Fed chairman Jerome Powell in particular became a target of the president, who repeatedly insulted Powell in public and called for his resignation. Powell was succeeded in May by Trump nominee Kevin Warsh.
Last year, Trump announced that he was removing Cook from the Fed's board of governors with immediate effect. He said there were sufficient grounds to believe she had made false statements in one or more mortgage agreements.
Cook then announced through her lawyers that she would take legal action, arguing that Trump had no authority to remove her. She denied the allegations.
Cook said that, if she had unknowingly provided incorrect information, it would have happened years before she took office and in connection with a private mortgage.
Cook has been a member of the Fed's seven-member board of governors since May 2022. According to the Fed, her term is due to run until January 31, 2038.
with Reuters
