Schools will not be allowed to take race into account when making public school assignments.
The plan was designed to achieve racial diversity in the classroom.
The U.S. Supreme Court voted five-to-four in the decision, which affects schools in Louisville and Seattle.
It’s expected the decision will halt similar plans in hundreds of school districts across the country.
The high court did leave the door open for using race in limited circumstances.
The Bush Administration has taken the parents side, arguing that racial diversity is a noble goal, but can be sought only through race-neutral means.