"The Constitutional Court nullified with a decision on December 4, 2017 the legal regulation that until now prevented such couples from marrying", read a statement from the court.
Austria is all set to join the list of countries that allow same-sex marriage.
Same-sex couples will be allowed to marry in Austria from 2019, according to a ruling by the country's Constitutional Court announced on Tuesday.
Legal partnerships have been an option for same-sex couples since 2010, but the Constitutional Court ruled that the current laws are discriminatory.
The move brings Austria into line with many other European nations including Germany, France, Britain and Spain.
It added that keeping the two institutions separate suggests that "people with same-sex sexual orientation are not equal to people with heterosexual orientation".
The court ruled on the issue after two women in a registered civil partnership went to court after they were denied the right to marry by authorities in the capital Vienna.
"We are very happy", said The Homosexual Initiative Vienna (HOSI) chairman Christian Hoegl.
It is therefore up to each member state to introduce same-sex marriage or civil unions.
Existing restrictions on marriage are inherently discriminatory against same-sex couples, the court argued, because disclosing one's marital status automatically indicated whether the partnership was a same-sex or heterosexual one.
The two parties negotiating to form a new government after Austria's October election, the conservative Austrian People's Party and the right-wing Freedom Party, have so far opposed gay marriage.