Accusations of genocide by Serbia in Croatia during the early 1990s will be heard at the International Court of Justice.
Judges at the UN's highest court in The Hague voted by 10 to seven that it had the jurisdiction to hear the case.
Croatian sources say that 20,000 Croatians died in the conflict and hundreds of thousands of Serbs were displaced.
This will be only the second genocide case to come before the court.
The first was also brought against Serbia - by Bosnia. Serbia was cleared in that case.
A date for hearing Croatia's complaint is yet to be set.
Serbia had argued that the court had no jurisdiction to hear Croatia's case.
It said the former Federal Republic of Yugoslavia was not party to the UN's genocide convention nor even a member of the UN when the complaint was filed.
Croatia first filed the complaint in 1999, accusing Serbia of "a form of genocide". It referred to crimes committed "in the Knin region and in eastern and western Slavonia and Dalmatia".
In February 2007, the ICJ cleared Serbia of direct responsibility for genocide during the Bosnian war.
However, it said Serbia had broken international law by failing to stop the killings.
