Gayatri Devi, once described as one of the most beautiful women in the world, died in July 2009 at the age of 90.
The fashion icon and former MP was the third wife of the maharajah of Jaipur, in northern India.
Her stepchildren had challenged her will in court, arguing that she had been "misguided" by her grandchildren in the later stages of her life.
Her death sparked a court battle over her fortune - including palaces that now operate as luxury hotels - which the local media estimated at between $200m (Â£130m) and $400m.
Gayatri Devi's death triggered a showdown between her grandchildren, Devraj Singh and Lalitya Kumari, and other descendents of the former maharajah.
According to her will, her two grandchildren would be the sole inheritors of her properties.
But her step children argued that she made the will when she was elderly, frail and unable to talk properly, and that they should have a share of the estate.
On Wednesday the Supreme Court upheld an earlier judgement by the Delhi High Court in favour of the grandchildren, saying they had been deprived of their rightful share in the properties.
"All these years my sister and I have only been asking for our father's shares in the family company and nothing beyond that," AFP news agency quoted Devraj Singh as saying after the ruling.
"Finally, I am one step further to be able to do my various duties towards my ancestral land."
Gayatri Devi supported education for women, and founded a prestigious school in Jaipur, which is now the capital of Rajasthan state.
She broke with tradition by winning election to parliament in 1962 and was re-elected twice.
The grandchildren of one of the last queens of India have won a long legal battle to inherit her properties.