The trial from an Israeli test range involved the Arrow 3 interceptor, designed to shoot down missiles above the atmosphere, with Israel concerned over the potential for attacks from enemies including Iran.
A similar test a year ago failed, but today's trial intercepted a ballistic missile target above the Mediterranean.
"This successful test is a major milestone in the development of the Arrow Weapon System and provides confidence in future Israeli capabilities to defeat the developing threats," Israel's defence ministry said.
The Arrow project was first launched in 1988 as part of the then Star Wars programme under late US president Ronald Reagan that was abandoned in 1993.
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Arrow 3, developed jointly between the United States and Israel, is intended to serve as Israel's uppermost missile interception system. Lower-altitude interception systems are either already deployed or close to being operational.
Partly financed by the United States, the Arrow system was developed and produced by Israeli Aerospace Industries in partnership with Boeing.
Israel strongly opposed a nuclear deal struck in July between Iran and major powers, arguing it would not block its regional rival's path to atomic weapons.
The United States said earlier this month it was conducting a "serious review" into reports that Iran carried out a new round of ballistic missile testing in violation of UN resolutions.