The ruling comes after a taxi driver challenged a $507 (£311) fine imposed by the local authorities in the capital, Seoul. The city's tortuous congestion led taxi drivers to install new mobile TV systems in an attempt to beat boredom.
Watching TV while driving was a factor in 200 accidents last year, police say. Three people were killed and 351 were injured in those accidents.
In 2005 South Korea launched a new broadcasting system called Digital Media Broadcasting (DMB), which beams television to mobile screens.
Over 17.8 million people now use the system, government figures show, although not all of those will be on car dashboards.
Last year, the city authorities passed a regulation banning their use in the front seats of taxis. But when the law was challenged in court, judges ruled the regulations were illegal because they were based on a 1961 law that had been superseded.
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