The court dismissed a complaint by three organizations in support of scores of migrants stranded at the border between France and Italy since mid-June.
The migrants - most of them Africans - have become a source of tension between France and Italy and their plight has illustrated the immigration crisis facing Europe as it struggles to agree on how to divvy up its responsibility for those flocking to its shores.
"The suppression of systematic interior border controls in the Schengen area does not prevent French authorities from carrying out identity controls," the State Council said in a statement.
The administrative court added that such controls did not "exceed the legal framework, be it by their magnitude, frequency or implementation.
"These controls are thus not equivalent to the implementation of a permanent and systematic control at the French-Italian border," read the statement.
Between 150 and 200 migrants are camped out on seaside rocks and under a railway bridge near the Italian border post of Ventimiglia, where French police have been stopping migrants from crossing into France
French President Francois Hollande said earlier this month that the border had not been closed, but strict controls were being carried out on immigrants hoping to pass into Europe via France after washing up on Italy's shores on rickety boats from Libya.
"We are applying the rules," he said in reference to the Dublin agreement which obliges migrants to apply for asylum in the European country in which they first set foot.
Many migrants hope to avoid doing so as they do not want to stay in recession-hit Italy but hope to reach countries further north with better job prospects.
Italy has struggled to accomodate some 60,000 migrants which have arrived on its shores this year.