"The international high court decided clearly today that this racist wall is illegal to the root and Israel should stop building it and take down what has already been built of this wall. We welcome this decision," Palestinian Prime Minister Ahmed Qureia said.
He hailed the ruling as the court in The Netherlands was still reading its decision, which had leaked ahead of time. "This is an historic day and a historic decision," Qureia said.
Israeli officials defended the wall during a press conference while the decision was being read.
"The International Court in The Hague has no authority to deal with disputes between Israel and the Palestinians," Israeli Foreign Ministry spokesman Jonathan Peled told reporters while the court's decision was being read.
Yes, it does, said the court as it began reading its ruling.
The 14-1 ruling said the barrier is illegal and demanded Israel dismantle it and compensate those Palestinians whose property was confiscated.
"The construction of the wall being built by Israel, the occupying Power, in the Occupied Palestinian Territory, including in and around East Jerusalem, and its associated regime, are contrary to international law," the ruling says, according to the paper.
The sole opponent was the American judge, Thomas Buerghenthal.
Israel said before the ruling that it would not abide by the World Court's decision, reports CBS News Correspondent Robert Berger, because it does not acknowledge the court's authority to rule on the barrier.
"It's not we who should be before the international court, it's they, the Palestinian terror regime," said Finance Minister Benjamin Netanyahu, who called the barrier legitimate self-defense.
"Does it prove effective against suicide bombers? Yes! That's why we're building it," he said.
Demonstrators for and against the barrier, which Palestinians consider a land grab, shouted their concerns ahead of the decision.
A banner where hundreds were gathering in the West Bank town of al-Ram, near Ramallah, read: "The Israeli wall, longer and higher than Berlin, but just as disgusting."
Jamal Juma, coordinator of a Palestinian group called The Anti-apartheid Wall Campaign, welcomed the 14-1 court decision. "It's a great decision. We are thrilled. It very clearly delegitimizes the wall and demands that it be pulled down," Juma said.
Only 6 miles away, a few dozen Israelis gathered by a concrete section of the fence on the outskirts of Jerusalem, held pictures and banners of terror victims, waved Israeli flags, and displayed a large banner reading: "Fence out terrorism."
The ruling against Israel could add international pressure to stop construction of the 425-mile complex of towering concrete walls, razor-wire fences, trenches and watch towers. About a fourth has been completed so far, roughly along the pre-1967 border but with many dips into the West Bank.
"There are limitations imposed on the fence by the Supreme Court in Israel, and we will obey our Supreme Court's decisions and not a panel of European Union judges who are not exactly friendly toward Israel," Justice Minister Yossef Lapid told Israel radio.
Armed with a court ruling that the barrier is illegal, the Palestinians want the U.N. General Assembly to demand Israel dismantle it. If Israel refuses, the Palestinians want the Security Council to enforce it, which could draw a U.S. veto.
"We think that Israel and all the other countries should respect the decision of the court," Nasser al-Kidwa, the Palestinian U.N. observer, said Friday from The Hague. "We will not excuse the Security Council from its responsibilities."
Israel's Army radio reported that the Defense Ministry expected Palestinian violence in the wake of any decision handed down. Palestinian Cabinet minister Saeb Erekat dismissed any suggestion Palestinian areas would erupt.
"I think this going to the high court is a way of seeking a diplomatic solution, not a way to violence," Erekat said.
Tayseer Tamimi, a Muslim cleric who addressed the al-Ram rally from beneath a canopy adorned with a picture of Palestinian leader Yasser Arafat and a Palestinian flag, urged people to protest the wall, but did not advocate violence. He also criticized the Arab world for staying silent when Israel began construction.
Also on Friday, the Israeli army spokesman's office said a Palestinian threw a hand grenade toward Israeli soldiers who had asked him to stop for inspection at a main junction near the Gaza town of Beit Hanoun. During an exchange of gunfire, the Palestinian escaped unharmed, the military said. No Israeli soldiers were injured.