In a one-sentence order, the court left in place a ruling by the Oregon Supreme Court in favor of Mayola Williams. The state court has repeatedly upheld a verdict against Altria Group Inc.'s Philip Morris USA in a fraud trial in 1999.
The judgment has grown to more than $145 million with interest.
The justices heard arguments in the case in December, but said Tuesday that they are not passing judgment on the legal issues that were presented. Instead, it is as if the court had declined to hear the case at all.
"It's a bit unusual for the justices to hear argument in a case and then decide that they don't want to rule on the merits of it. But that's what's happened here," said CBS News legal analyst Andrew Cohen.
Philip Morris had argued that the award should be thrown out and a new trial ordered because of flaws in the instructions given jurors before their deliberations.
Business interests had once hoped the high court would use the case to set firm limits on the award of punitive damages, intended to punish a defendant for its behavior and deter a repeat offense.
But the dismissal still leaves no firm precedent for future cases.
"The dismissal of the appeal is good news for the plaintiff, obviously. She's been fighting the tobacco company for a decade for this money. But the lack of an actual ruling from the justices doesn't offer much guidance or clarity to other litigants involved in these cases," said Cohen.
The case has bounced around appellate courts since 1999, when Williams convinced a jury that Philip Morris should be held accountable for misleading people into thinking cigarettes were not dangerous or addictive.
Williams' husband Jesse was a janitor in Portland who started smoking during a 1950s Army hitch and died in 1997, six months after he was diagnosed with lung cancer.
Williams, according to his widow, never gave any credence to the surgeon general's health warnings about smoking cigarettes because tobacco companies insisted they were safe. Only after falling sick did Williams tell his wife: "Those darn cigarette people finally did it. They were lying all the time."
His widow was awarded $800,000 in actual damages. The punitive damages are about 97 times greater. A state court previously cut the compensatory award to $521,000.
The value of the award has climbed to more than $145 million because of accrued interest, the company said. Sixty percent of it would go to an Oregon crime victims fund, although the company has said it might continue to contest the portion owed the state.
The Oregon high court made its first decision in 2002, refusing to hear an appeal from Philip Morris.
Then the U.S. Supreme Court rejected the judgment of nearly $80 million, saying in another case that damages generally should be held to no more than nine times actual economic damages. It declined, however, to make that a firm rule.
Next, the Oregon Supreme Court upheld the punitive damages, citing "extraordinarily reprehensible" conduct by Philip Morris officials.
Then came the U.S. Supreme Court's second take on the case. In 2007, the court said in a 5-4 decision that jurors may punish a defendant only for harm done to someone who is suing, not other smokers who could make similar claims.
The state court was told to reconsider the award in the context of instructions for the trial jury that Philip Morris proposed and the trial judge rejected.
In January, the Oregon court said there were other defects in the instructions that violated Oregon law, and supported the trial judge's decision not to give the proposed instructions to the jury.
The case is Philip Morris USA v. Williams, 07-1216.