A coalition of plastic industry groups challenged the ban.
They claimed Manhattan Beach did not comprehensively review the impact of the bag ban.
Supporters of doing away with single-use plastic bags in California hailed the decision.
Angela Howe with the Surfrider Foundation said cities and counties can now move forward with bag bans or fees on paper bags.
"This is a win for Manhattan Beach, but on the larger scale there have been many cities waiting in the wings who've wanted to pass single-use plastic bag bans along with fees on paper bags," said Howe. "But (they) have been waiting to watch the Supreme Court case because they don't have the fiscal resources to be tied-up in litigation."
Howe said 12 cities and counties in California have banned single-use plastic bags.
"We have about a dozen cities and counties in the state who've already enacted bans and we're going to see, I think, at least a handful more after this positive ruling," Howe said.
Efforts to create a statewide ban on single-use plastic bags have failed to gain enough votes in Sacramento the past few years.
But Howe said the efforts at the local level may get a boost from the Supreme Court ruling.
