The Council of the State said registrations of certain A, B and CLA-class models, frozen since June, should be resumed in two days.
"It does not appear that if these cars are put on the road in France...They will pose a serious threat to the environment," the ruling said, ordering the government to pay Mercedes France 3,000 euros (4,000 USD) in damages.
France's environment ministry had initiated the move in June, saying the cars use an air conditioning refrigerant that the European Union believes emits excessive greenhouse gases.
Since January 1, European Union norms have demanded that car makers use a cleaner refrigerant that is deemed less polluting than older products.
Daimler says it will persist with the older product with the hope that "in the next few years" a better version will be available. The company also stated that no country besides France has raised an objection to the continued use of the older coolant.