Families of the victims who were watching the proceedings from the Philippines erupted in joy on Wednesday when the court verdict was read out.
Duterte, who has been held in detention at the ICC in The Hague since his arrest in March 2025, was not in court.
The Philippines formally withdrew its ICC membership in 2018, and Duterte's defence had argued this meant the court had no jurisdiction over the case.
But the appeals judges confirmed a lower court ruling that the case could continue and rejected the defence's demands to immediately release the 81-year-old former president.
They ruled that the fact that a preliminary examination - a precursor to a formal investigation - had already started before the Philippines withdrew its membership was enough to trigger continuing jurisdiction over the alleged crimes.
Prosecutors say Duterte created, funded and armed death squads to target and kill suspected narcotics peddlers and users when he was in power between 2016 and 2022.
Duterte has long insisted he instructed police to kill only in self-defence and has always defended the crackdown.
When the verdict was delivered, applause rang out among victims' families who had gathered at a Philippine university to watch the proceedings.
Some chanted: "Hold Duterte accountable."
"No one is above the law, even Duterte," said Nanette Castillo, whose son was killed during the brutal campaign.
