The EU Court of Justice rejected a legal challenge brought by Philip Morris International and British American Tobacco.
The ruling could weigh on profits for the tobacco industry and sets a precedent for other governments to crack down on a habit that causes nearly six million deaths a year, world-wide.
"The court finds that, in providing that each unit packet and the outside packaging must carry health warnings ... the EU legislature did not go beyond the limits of what is appropriate and necessary," the court said in its decision.
The legal challenge, which was also supported by Japan Tobacco International and Imperial Brands, can now be taken no further.
The Tobacco Products Directive will take effect on 20 May, though there is a one-year sell-through period to allow wholesalers and retailers to sell existing stocks.
The Irish Cancer Society has welcomed the judgment, saying it is a defeat for the tobacco industry, which knows plain packaging works.
Its Head of Services and Advocacy, Donal Buggy, said: "Plain packaging of tobacco will save lives."
He said the ruling "represents the overcoming of another legal hurdle to the introduction of plain packaging in Ireland.
"What remains to be done now is the passing of minor technical amendments to legislation here, so that plain packaging can be introduced, in the very near future."
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