Nadia Eweida, 60, took the airline to a tribunal after she was forced out of her job for wearing a cross in breach of company uniform codes.
Her case was rejected in Britain but today European judges found in her favour. They ruled against three more Christians who launched similar action.
Miss Eweida, from Twickenham, south-west London, was sent home in September 2006 for displaying a small silver cross on a chain around her neck which she wore as a personal expression of her faith.
She took British Airways to a tribunal but a panel rejected her claims and ruled she was not a victim of religious discrimination.
The decision was upheld by The Court of Appeal and the Supreme Court before Miss Eweida took her fight to the European Court of Human Rights (ECHR).
She returned to work in customer services at Heathrow Airport's Terminal 5 in February 2007, after BA changed its uniform policy on visible items of jewellery.
At the ECHR, Miss Eweida argued BA's action contravened articles nine and 14 of the European Convention on Human Rights which prohibit religious discrimination and allow "freedom of thought, conscience and religion".
Lawyers for the Government, which contested the claim, argued her rights were only protected in private.
But judges today ruled there had been a violation of article nine (freedom of religion), by five votes to two.
They rejected the cases of nurse Shirley Chaplin, 57, who was switched to a desk job after she also refused to remove a crucifix which she wore with her uniform.
Marriage counsellor Gary McFarlane, 51, who was sacked for saying he might object to offering sex therapy to homosexuals, and registrar Lillian Ladele, who was disciplined when she refused to conduct same-sex civil partnership ceremonies, also lost their legal action.
The judgment, published in Strasbourg, found a fair balance was not struck between Miss Eweida's desire to demonstrate her religious belief and BA's wish to "project a certain corporate image".
It found the airline's aim was "undoubtedly legitimate" but said domestic courts accorded it "too much weight".
It concluded: "Ms Eweida's cross was discreet and cannot have detracted from her professional appearance.
"There was no evidence that the wearing of other, previously authorised, items of religious clothing, such as turbans and hijabs, by other employees had any negative impact on British Airways' brand or image.
"Moreover, the fact that the company was able to amend the uniform code to allow for the visible wearing of religious symbolic jewellery demonstrates that the earlier prohibition was not of crucial importance.
"The court therefore concludes that, in these circumstances where there is no evidence of any real encroachment on the interests of others, the domestic authorities failed sufficiently to protect the first applicant's right to manifest her religion."
In view of this conclusion, it decided not to examine Ms Eweida's complaint under article 14.
Shami Chakrabarti, director of human rights group Liberty, said: "Today's judgment is an excellent result for equal treatment, religious freedom and common sense.
"Nadia Eweida wasn't hurting anyone and was perfectly capable of doing her job whilst wearing a small cross.
"She had just as much a right to express her faith as a Sikh man in a turban or a Muslim woman with a headscarf.
"British courts lost their way in her case and Strasbourg has actually acted more in keeping with our traditions of tolerance.
"However the Court was also right to uphold judgments in other cases that employers can expect staff not to discriminate in the discharge of duties at work."
Miss Eweida said she was "jumping for joy" at the decision but that she was disappointed for the other three applicants.
Speaking outside her lawyer's chambers in central London, she said: "I'm very happy and very happy and very pleased that Christian rights have been vindicated in the UK and Europe.
"I'm very pleased that after all this time the European court has specifically recognised, in paragraph 114 in the judgment, that I have suffered anxiety, frustration and distress.
"I'm disappointed on behalf of the other three applicants but I fully support them in their asking for a referral for their cases to be heard in the Grand Chamber, and I wish them every success in the future to win.
"I was very selfish initially when I heard the verdict because I was jumping for joy and saying 'thank you Jesus'."
Miss Eweida thanked her colleagues, Business Secretary Vince Cable, Ms Chakrabarti, as well as the press and others for their help in her case.
"It's a vindication that Christians have a right to express their faith on par with other colleagues at work visibly and not be ashamed of their faith," she said.
Prime Minister David Cameron welcomed the ruling on Twitter.
He wrote: "Delighted that principle of wearing religious symbols at work has been upheld - ppl shouldn't suffer discrimination due to religious beliefs."
The British Government was ordered to pay Miss Eweida 2,000 euro (£1,600) in damages and 30,000 euro (£25,000) to cover costs.
The ECHR judges rejected Mrs Chaplin's case after they found she was asked to remove the cross for health and safety purposes.
While they agreed the refusal to allow her to remain in a nursing position was an "interference with her freedom to manifest her religion", they said the decision was necessary to protect the health and safety of nurses and patients.
And they concluded hospital managers were better placed to make decisions about clinical safety than a court.
The judgment stated: "There was also evidence that another Christian nurse had been requested to remove a cross and chain; two Sikh nurses had been told they could not wear a bangle or kirpan; and that flowing hijabs were prohibited.
"The applicant was offered the possibility of wearing a cross in the form of a brooch attached to her uniform, or tucked under a high-necked top worn under her tunic, but she did not consider that this would be sufficient to comply with her religious conviction."
Miss Ladele's case was rejected after judges decided Islington Council's action was "legitimate" given it was also obliged to consider the rights of same-sex couples.
The ruling found against Mr McFarlane on the grounds that he took on the role at Relate in the knowledge that clients could not be divided up in accordance with their sexual orientation.
It concluded the company's action was designed to enable it to provide a service without discrimination.