An Arrow-3 missile hit a target above the Earth's atmosphere that simulated the trajectory of long-range missiles like the Iranian Shahab-3.
Further tests are expected before the system, which is being developed together with the US, can be deployed.
It is the latest layer in Israel's system of shields, designed to protect it from external threats.
The Lebanese militant group Hezbollah, which fought a war with Israel in 2006, is reported to have more than 100,000 missiles and rockets which can reach anywhere in Israel.
Iran, which calls for Israel's eradication, also has missiles which can reach Israel and beyond.
The Israeli defence ministry hailed Thursday's test as a "major milestone".
A similar test a year ago failed because the system was not able to lock on to the target.
Israel's missile shield also includes the already-deployed "Iron Dome" system that targets short-range rockets fired by Palestinian militants in the Gaza Strip, and the mid-range "David's Sling" that is close to being operational and will target missiles supplied to Hezbollah by Iran.
Israel's defence ministry says it has successfully tested an advanced ballistic missile defence system.