
Observers have warned the new election could bring even more tension to a country where politics is largely divided along tribal lines.
The move to nullify an election was unprecedented on the African continent. "This is a precedent-setting ruling", he said.
The six-judge bench ruled 4-2 in favour of the petition filed by Odinga.
The Independent Electoral and Boundaries Commission declared Kenyatta the victor last month by a margin of more than 1.4 million votes, with around 19 million eligible voters.
The court did not place any blame on Mr Kenyatta or his party.
Raila Odinga, the leader of the opposition party National Super Alliance (NASA), had alleged widespread fraud in the August 8 vote, including the hacking of the electoral commission's computer system. Almost 80 percent of the 19 million registered voters cast their ballots.
It was a ruling in favor of the petitioners, Odinga and his NASA coalition, who have argued that a hacked voting system made for a "stolen election".
Maraga added: "The first respondent (the Independent Electoral and Boundaries Commission) failed, neglected or refused to conduct the presidential election in a manner consistent with the dictates of the constitution".
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A lawyer for President Kenyatta said the decision had been "very political" but had to be respected.
"This was a tremendous moment for Kenyan democracy, where the court upheld the rule of law".
His opponent, President Uhuru Kenyatta, won an election that global observers had praised as orderly and fair; Odinga's refusal to accept defeat seemed graceless and, given Kenya's history of political violence, dangerous.
He has implored all candidates, political parties and coalitions to exercise their leadership to encourage their supporters and population as a whole to fully accept the judgment of the Supreme Court.
Kenya has seen widespread unrest since the election, and human rights groups said at least 24 people had died at the hands of police since the vote, ITV News reported.
Instead, opposition supporters exploded in celebration. "I'm telling, God is on our side".
He said: 'The court has made its decision. Though he conceded "little aberrations here and there", he said the election was not rigged.
In 2007, following his defeat, more than 1,000 people died in violent clashes across the country.
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However, violence broke out as opposition activists cried foul in days of unrest which claimed the lives of at least 28 people. During the ruling, Maraga said the court found no evidence of misconduct on the part of the third respondent who is Kenyatta.
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