The decision means Kennedy will no longer face the death penalty over the case and will now have his sentence changed to life in prison without parole, along with one other man also convicted and sentenced to death for child rape in the same state.
The US Supreme Court had already banned executions for rape in 1977 in a case in which the victim was an adult woman. However, five US states still allow executions in child rape cases.
In its written ruling, the court said that even if a rape was particularly atrocious, it was impossible to define the circumstances under which the death penalty would be justified without risking courts making arbitrary decisions.
"The death penalty is not a proportional punishment for the crime of child rape," the ruling, written by Justice Anthony Kennedy, said.
"The resort to the penalty must be reserved for the worst of crimes and limited in its instances of application," the ruling said.
John McCain, the Republican presidential hopeful said in a statement he was disappointed by the ruling.
"That there is a judge anywhere in America who does not believe that the rape of a child represents the most heinous of crimes, which is deserving of the most serious of punishments, is profoundly disturbing," he said.
And Barack Obama, his Democratic rival, agreed, saying it was "a heinous crime and if a state makes a decision that under narrow, limited, well-defined circumstances the death penalty is at least potentially applicable that that does not violate our constitution".
In a dissenting opinion, Justice Samuel Alito, along with Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas, denounced the decision as too "sweeping".
The justices said the court had banned the death penalty "no matter how young the child, no matter how many times the child is raped, no matter how many children the perpetrator rapes, no matter how sadistic the crime", the opinion said.
Since the death penalty was reinstated in the United States in 1976, it has only been carried out on those convicted of crimes of murder.
The last execution in the US of someone other than a convicted murderer was in 1964.