The ruling, expected next year, will clarify the relationship between church and state and address a perceived anomaly in the First Amendment that prevents the government from promoting religion while prohibiting interference in its "free exercise".
After a ruling last year pupils at state schools cannot be compelled to recite the pledge because it refers to America as "one nation, under God".
The case was brought by the atheist father of a nine-year-old schoolgirl, who said the pledge was an affront to his beliefs.
But the Supreme Court will next summer consider whether the now-voluntary pledge contravenes the First Amendment. Its involvement will provoke furious debate among politicians, educators and church leaders as the November 2004 presidential election approaches.
"Because of its political significance, it will dwarf everything else the Supreme Court will do this term," predicted Steven Shapiro, legal director of the American Civil Liberties Union. "It will put the court right back in the middle of the culture wars."
The retention of the pledge in schools is supported by President George W Bush, a Republican. White House spokesman Scott McClellan said: "The Declaration of Independence refers to God or the Creator four times, sessions of Congress each day begin with prayer; on our currency, it says 'In God we trust'. The pledge is an important right that ought to be upheld by the Supreme Court."
Roberta Combs, president of the Christian Coalition of America, said:
"Anything less than a (unanimous) rebuke of the lower federal court would be a slap in the face of the 80 to 90 per cent of Americans who support schoolchildren reciting the pledge."
Others want the California decision upheld. The Rev Barry Lynn, executive director of Americans United for Separation of Church and State, said: "A country founded on religious freedom should not be afraid to recognise that love of God and love of country are not the same for some people."
Edward Bellamy, a Baptist minister, wrote the Pledge of Allegiance in 1892.
The words "under God" were added during the Cold War in 1954 when a patriotic Congress sought to separate Americans from "godless Communists".
Religious teaching in schools was declared unconstitutional in 1948, and school-promoted prayer in the classroom was banned in 1962. More recent rulings have prohibited schools and public places from displaying the Ten Commandments and nativity scenes at Christmas.