JOIN USAl Wasat was founded by former members of the Muslim Brotherhood who quit the organisation to form their own party.
The court's ruling, which makes Al Wasat the first party to gain licence after president Hosni Mubarak stepped down, gives it the right to take part in the next parliamentary elections, Xinhua reported.
Al Wasat's application for licence had been turned down earlier as the Egyptian constitution bans political parties with a religious agenda.
Al Wasat has invited Egyptian Christians to join the party, and its manifesto says a Christian can become head of state in a Muslim-dominated society.
Meanwhile, 14 Palestinians have been released from Egypt's prisons, a Palestinian spokesperson said Saturday.
Imad Al-Sayed, a representative of the families of Palestinians detained in Egypt, said they were waiting for the 14 people to arrive in the Gaza Strip. There are still 31 Palestinians in Egyptian jails.