BT has been told to block access to Newzbin 2, a site sharing links to pirated films.
The landmark case marking the first time an ISP has been told to block such a site was originally brought by Motion Picture Association (MPA).
BT and MPA will meet later in the year to discuss how the blocking of Newzbin 2 will work.
At the High Court, Justice Arnold said he believed "it follows that BT has actual knowledge of other persons using its service to infringe copyright," the BBC reported.
"It knows that the users and operators of Newzbin 2 infringe copyright on a large scale, and in particular infringe the copyrights of the studios in large numbers of their films and television programmes," he added.
"It knows that the users of Newzbin 2 include BT subscribers, and it knows those users use its service to receive infringing copies of copyright works made available to them by Newzbin 2."
BT was pleased a decision had been made to clarify what steps rights holders need to take if they want the ISP to block a website.
"This is a helpful judgement, which provides clarity on this complex issue," an official statement read.
"It clearly shows that rights holders need to prove their claims and convince a judge to make a court order. BT has consistently said that rights holders need to take this route. We will return to court after the summer to explain what kind of order we believe is appropriate."
Chris Marcich, president and managing director of MPA Europe, said the ruling was "a victory for millions of people working in the UK creative industries and demonstrates that the law of the land must apply online."
"This court action was never an attack on ISPs but we do need their co-operation to deal with the Newzbin site which continually tries to evade the law and judicial sanction," he added.
"Newzbin is a notorious pirate website which makes hundreds of thousands of copyrighted products available without permission and with no regard for the law."
Of course, not all were overjoyed by the decision. Peter Bradwell, copyright campaigner at the Open Rights Group, said website blocking was "pointless and dangerous."
"These judgements won't work to stop infringement or boost creative industries and there are serious risks of legitimate content being blocked and service slowdown," Bradwell said.
"If the goal is boosting creators' ability to make money from their work then we need to abandon these technologically naive measures, focus on genuine market reforms, and satisfy unmet consumer demand."
