The court's refusal to allow immigrants, who have been allowed to stay in the United States on humanitarian grounds, to apply to become permanent residents could affect thousands of immigrants, many of whom have lived in the US for years.
The ruling came on Monday after the justices barred a Salvadorian married couple's applications for permanent residency after they appealed. They couple had entered the US unlawfully.
Biden, who has vowed to roll back many of Donald Trump's hardline immigration policies, had opposed the immigrants in this case, placing the president at odds with immigration advocacy groups and some of his fellow Democrats.
A federal law called the Immigration and Nationality Act generally requires that people seeking to become permanent residents have been "inspected and admitted" into the United States.
At issue in the case was whether a grant of Temporary Protected Status (TPS), which gives the recipient "lawful status," satisfies those requirements.
Liberal Justice Elena Kagan said that "because a grant of TPS does not come with a ticket of admission, it does not eliminate the disqualifying effect of an unlawful entry."
Foreign nationals can be granted Temporary Protected Status if a humanitarian crisis in their home country, such as a natural disaster or armed conflict, would make their return unsafe.
12 countries currently have such designations: El Salvador, Haiti, Honduras, Myanmar, Nepal, Nicaragua, Somalia, Sudan, South Sudan, Syria, Venezuela and Yemen.
There are about 400,000 people in the United States with protected status, which prevents deportation and lets them work legally.
The Supreme Court ruled in the case on a day when Vice President Kamala Harris visited Guatemala as part of the Biden administration's efforts to press that country as well as El Salvador and Honduras to do more to tackle corruption to improve social conditions and make people from those Central American nations less eager to emigrate.
Biden issued a flurry of immigration-related executive decisions after he assumed office, including orders to end “extreme immigration enforcement”, and to preserve and fortify the Deferred Action for Childhood Arrivals (DACA) program, which gives work permits and protection from deportation to people brought illegally to the US as minors.
The decision led to an influx of refugees and unaccompanied migrant children from South and Central America to the southern US border in recent weeks, forcing the authorities to recognize the situation on the south border as a crisis.