Friday's decision makes it likely that the issue will ultimately be decided by the U.S. Supreme Court.
Some of the nation's largest tobacco companies filed lawsuits to invalidate the requirement for labels, which include warnings showing the dangers of smoking and encouraging smokers to quit. The companies contended that the proposed warnings went beyond factual information into anti-smoking advocacy, the AP reported.
The labels are a part of the requirements of the Family Smoking Prevention and Tobacco Control Act, signed into law in 2009 by President Barack Obama. For the first time, the law gave the U.S. Food and Drug Administration significant control over tobacco products.
The proposed label requirement from the FDA -- set to kick in this September -- would have emblazoned cigarette packaging with images of people dying from smoking-related disease, mouth and gum damage linked to smoking and other gruesome portrayals of the harms of smoking.