A federal judge in Massachusetts had blocked the planned cuts to the National Institutes of Health (NIH) grants in June, saying they amounted to racial discrimination and LGBTQ prejudice.
The Trump administration has targeted nearly $800 million in NIH research funding for elimination as part of its campaign against diversity, equity and inclusion policies.
In a 5-4 vote, the conservative-majority Supreme Court allowed the cuts to go ahead while legal challenges continue in lower courts.
Chief Justice John Roberts, a conservative, sided with the three liberal justices on the top court in the minority.
The targeted diversity grants represent only a fraction of the more than $10 billion in NIH research and contracts that have been put on the chopping block since President Donald Trump took office in January.
Other affected projects include studies on the health effects of global warming, Alzheimer's disease and cancer.
Trump has launched a sweeping overhaul of the US scientific establishment in his second term -- slashing funding, attacking universities, and overseeing mass layoffs of scientists across federal agencies.
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