The ruling on Thursday, which was delivered by a judge who is also a member of the ruling Cambodian People's Party (CPP), barred 118 members of the opposition from politics for five years.
The party had posed a major election challenge to Mr Hun Sen, a former Khmer Rouge commander who is the world's longest-serving prime minister.
Cambodia's Supreme Court rules Thursday on whether or not to dissolve the country's only credible opposition party, paving the way for an all-but-certain ruling party coronation following general elections slated for 2018 and dealing what experts say would represent a final blow to the nation's already damaged democracy.
The government had asked the court to dissolve the Cambodia National Rescue Party, which was accused of plotting to take power after the arrest of party leader Kem Sokha.
He called on the United States president to reprimand his own officials and the USA embassy in Phnom Penh, which Hun Sen accused of supporting the opposition.
Sam Rainsy resigned from the CNRP in February after Hun Sen vowed to change the laws on political party leadership to keep convicts out of leadership positions. His daughter Monovithya Kem said about 20 other party lawmakers have since fled the country. "The verdict is expected".
The ruling was widely expected, including by the CNRP, which did not send lawyers to contest the case.
Cambodia top court orders opposition party dissolved
"Dissolving the main opposition party, coupled with a heavy-handed crackdown on the media and civil society, certainly looks like the move of a dictator - a frightened one", said Charles Santiago, a member of the Malaysian Parliament and chair of ASEAN Parliamentarians for Human Rights. American influence has been waning for years as Cambodia edges closer to China, which has supported Hun Sen's efforts to "protect national security and stability".
Out of fear for their political future, some CNRP members who won seats in last June's local elections - in which the CPP won about 3.5 million votes against around 3 million won by the CNRP - have switched sides to the ruling party.
Dozens of police manned barriers outside the court in the centre of Phnom Penh, a yellow-painted building ornamented with gold in traditional Cambodian style. Life expectancy has risen from 50 to 70.
More than half the CNRP's members of parliament had already fled Cambodia, fearing detention in a crackdown on Hun Sen's critics, civil rights groups and independent media that began past year.
Political observer Lao Mong Hay said Hun Sen has been trying to "incapacitate CNRP by decapitating it, and destroy it if it can still remain a redoubtable rival in the forthcoming election".
Rainsy used to lead the Cambodia National Rescue Party but went into exile a year ago because of the threat of prison in legal cases against him that are widely regarded as politically motivated.
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