The court said Gujarat would have to obtain federal approval for special public prosecutors appointed by the state administration to try those charged with over 1000 deaths.
The order is seen as a stern rebuke to the state's Hindu nationalist BJP government, accused by rights groups of turning a blind eye to the sectarian violence.
The court also appointed India's former solicitor general Harish Salve as amicus curiae (friend of the court) in the western state.
Analysts said the friend of the court's role would be as an observer to guarantee impartiality.
The appointment demonstrates the Supreme Court's lack of faith in the provincial judiciary after 21 Hindus were acquitted in July for the torching of a Muslim-owned bakery during the riots that left 12 people dead.
The ruling came during the hearing of a joint petition filed by India's autonomous National Human Rights Commission (NHRC) and 17-year-old Zahira Shaikh to reopen the trial of those acquitted in the Best Bakery case.
Shaikh, whose father died in the riots, says she and many other witnesses retracted their incriminating testimony at trial because they were threatened by local Hindu leaders. She has since fled Gujarat.
Gujarat prosecution doubts
Last month the Supreme Court's Chief Justice V.N. Khare said he had no faith in the prosecution in the riot cases or in the Gujarat government.
"What happened in Gujarat would disturb anyone. And then when one finds that the offenders are not brought to book that certainly creates a strong reaction"
Lal Krishna Advani,
India's deputy prime minister
India's Deputy Prime Minister Lal Krishna Advani, who also belongs to the BJP, called the riots "disturbing" but argued that the provincial administration had no hand in the religious bloodletting.
"What happened in Gujarat would disturb anyone. And then when one finds that the offenders are not brought to book that certainly creates a strong reaction," Advani told the BBC’s Hardtalk programme, scheduled to be broadcast on Friday.
But Advani added that he did not accept that there had been a deliberate subversion of justice by the Gujarat state government.
Meanwhile, 13 of the 21 acquitted Hindus were rearrested on Thursday, only to be released on bail, according to Baroda city Police Commissioner Sudhir Sinha.
He added that police had warrants issued against all 21 accused on Tuesday, but seven were still to be served, he said.
The riots in Gujarat erupted in February 2002 after the deaths of 59 right-wing Hindu pilgrims in Godhra.
The deaths were initially attributed to a Muslim mob but subsequent investigations have cast doubt on that account.