A lower court recently annulled an EU decision to freeze the funds of an exiled Iranian opposition group, the People's Mujahideen.
The Court of First Instance, the EU's second most senior court, has decided to re-examine the case.
"The Court of First Instance wrongly deduced from examination of Mr Ocalan's statements that the PKK no longer existed and could thus no longer be represented by him," the higher court ruling said.
"The Court of Justice concluded that Mr Ocalan is acting validly on behalf of the PKK and can also instruct lawyers to represent it."
The PKK case is politically sensitive because Turkish nationalists accuse Brussels of promoting Kurdish separatism by insisting on cultural rights such as broadcasting and schooling in the Kurdish language as conditions for EU membership.
The Turkish government blames the PKK for more than 30,000 deaths since the group launched an armed struggle for a Kurdish homeland in southeast Turkey in 1984. Attacks have increased since the PKK called off a unilateral ceasefire in 2004.
The US, like the EU, blacklists the PKK as a terrorist organisation.
After the ruling in the Iranian case last month, the EU Council's secretariat, representing member states, said it would consider appealing on points of law to the higher European Court of Justice.
It played down the implications, saying the court had not annulled the regulation establishing the terrorism list, or other persons or entities named on it.
The Dutch office of the Al Aqsa Foundation, a group with alleged ties to the Palestinian armed resistance group Hamas, is also challenging its inclusion on the terrorist list.
It argues, like the People's Mujahideen, that EU member states have delayed giving reasons for their decision to keep the group on the list, depriving the group of a chance to defend itself.
In 1999 the European Court of Human Rights ruled that the 1999 trial of Abdullah Ocalan by Turkey was unfair.
The rebel leader is serving a life jail term after being found guilty of masterminding a separatist revolt in Turkey's southeast in which at least 30,000 people were killed in the 1980s and 1990s.