The Supreme Court overturned an earlier ruling by a lower court that the initial construction plan, approved by the defense ministry in 2009, was invalid because the construction's impact on the environment hadn't been properly assessed.
The plan calls for a modern military port that would hold up to 20 warships simultaneously, along with two 150,000 ton cruise ships.
The Jeju base, if completed as scheduled in 2015, will give Seoul a launching point for sending naval vessels into the South Sea, a key trade route for South Korea.
Civic groups and environment activists, along with some residents in a Jeju village called Gangjeong, have staged protests and taken legal steps to halt construction. They have cited potential environmental damage to the area designated as a UNESCO Biosphere Reserve.
Jeju, about an hour-long flight from Seoul, is a special self-governing province with autonomous rights in such fields as administration, taxation, finance and business. It is one of South Korea's most popular tourist destinations.