The court told the western state's government to set up a high-level police committee to have a fresh look at cases which were closed when investigators said they could not trace the culprits.
The sweeping judgement will affect nearly half of the estimated 4200 riot cases recorded during the 2002 bloodshed, in which about 2000 people, mostly Muslims, were killed.
The violence broke out after allegations that a Muslim group torched a train, killing 59 Hindus.
Human-rights groups said police often looked the other way during the riots and that state authorities had been lax in prosecuting the perpetrators.
"This unprecedented judgement is an indictment of the Gujarat government and the police," said Father Cedric Prakash, a social activist in the western state who has campaigned on behalf of riot victims.
"This unprecedented judgement is an indictment of the
and the police"
Father Cedric Prakash,
"It is clear that the Supreme Court has realised that the police and the government have not done their duty," said the Roman Catholic priest. "We had given up hope but this judgement reaffirms our faith in the judicial system."
The Hindu nationalist Bharatiya Janata Party (BJP), which rules Gujarat, reacted cautiously.
"The BJP has always believed that the victims should get justice and the guilty should be punished but what is unfortunate is that the entire Gujarat episode has been politicised, which is most inappropriate," BJP spokesman Mukhtar Abbas Naqvi told the Press Trust of India news agency.
The BJP headed India's coalition government during the riots and refused to dismiss Gujarat's hardline leader, Chief Minister Narendra Modi.
Gujarat's hardline chief minister
is feeling the judiciary's heat
India's left-leaning Congress-led government, which defeated the BJP in an upset in May's national elections, has vowed a more rigorous prosecution of Gujarat riot cases.
VK Gadvi, a Congress party leader in Gujarat, said the Supreme Court ruling showed Modi should go.
"On moral grounds the whole Gujarat Government should quit as they have been found incapable of doing justice," Gadvi said.
The Supreme Court decision to throw open investigations in Gujarat came after it intervened in two riot cases which had been widely publicised when two women victims went public with their accounts.
In April, India's top court ordered a fresh trial of 21 Hindus acquitted of torching to death 12 Muslims at a Gujarat bakery.
Gujarat's police looked the other
way as mobs massacred Muslims
The Supreme Court ordered the retrial to be held in the neighbouring state of Maharashtra to protect Zahira Shaikh, whose father was killed in the bakery and said she retracted testimony at the original hearing due to threats by Hindu hardliners.
This month, the Supreme Court also shifted to Maharashtra the trial of 20 men accused of killing 14 Muslims, including two women who were gang-raped. The sole adult survivor of the massacre, Bilkis Bano Yaqub Rasul, said she could not testify in Gujarat because authorities were not cooperative.
The court on Tuesday asked for the Gujarat police committee to submit reports every three months on their progress in looking anew at the riot cases.
Gujarat police chief AK Bhargav said the police would comply and examine between 200 and 300 cases a month.
"We will be reopening the cases and if evidence is found then there will be reinvestigation," he said.