Video report by ITV News Correspondent Juliet Bremner
The force placed a blanket ban over the capital in October, preventing the group from assembly of more than two people.
But two senior judges ruled the decision to impose the ban, made under Section 14 of the Public Order Act, was "unlawful."
Lawyers who acted for XR said after the ruling the Met now faces claims for false imprisonment from "potentially hundreds" of protesters who were arrested after the ban was established.
The force said 1,828 people were arrested during the protests, and more than 150 were charged with offences.
The Met Police said it was "disappointed" by the High Court ruling.
Over 10 days of protests to call for urgent action on climate change and wildlife losses, XR activists shut down areas around Parliament and the Bank of England and targeted London City Airport and Government departments.
Announcing the judgment in London on Tuesday, Lord Justice Dingemans and Mr Justice Chamberlain said the Met had no power to impose the ban because the Act does not cover "separate assemblies".
Lord Justice Dingemans said: "Separate gatherings, separated both in time and by many miles, even if coordinated under the umbrella of one body, are not a public assembly within the meaning of … the Act.
"The XR Autumn Uprising intended to be held from October 14 to 19 was not therefore a public assembly … therefore the decision to impose the condition was unlawful because there was no power to impose it under … the Act."
However, the judges noted there are powers within the Act which may be used lawfully to "control future protests which are deliberately designed to ‘take police resources to breaking point'" – one of Extinction Rebellion's stated aims.
Jules Carey, a solicitor from Bindmans law firm who represented XR, said: "The ban on the XR protest was hastily imposed, erratically applied and has now been unequivocally declared unlawful by the High Court.
"The police have powers to impose conditions to manage protests but not to ban them.
"This judgment is a timely reminder to those in authority facing a climate of dissent - the right to protest is a long standing fundamental right in a democratic society that should be guarded and not prohibited by overzealous policing."
The Met used Section 14 of the Public Order Act initially to restrict the protest action to Trafalgar Square, but following “continued breaches” of the order officers moved in to clear the area.
In response to the court ruling, a Met Office spokesperson said: "Whilst the Metropolitan Police Service is disappointed by today’s judgement we of course will respect the decision of the court.
"We will now carefully consider the judgement before deciding on our next steps."
Those bringing the legal action include the Green Party's Caroline Lucas, Labour's Clive Lewis and campaigner and journalist George Monbiot – who was arrested after the ban came into force.
Extinction Rebellion’s tactics are to cause “maximum disruption” and to overwhelm the capacity in police custody, including by refusing bail after being arrested.
The court heard the costs of policing the Autumn Uprising were in excess of £20 million.