The ruling ends an eight-year legal battle over the documents.
The manuscripts were in the possession of the family of Esther Hoffe, the secretary of Kafka's friend Max Brod.
The family had argued that it rightfully owned the manuscripts after her death.
David Blumberg, chairman the National Library of Israel, said the ruling was "a celebratory day for any person of culture, in Israel and abroad".
He said: "The Supreme Court asked the National Library to do its utmost to reveal Brod's estate to the public. The National Library will follow the court's ruling and will preserve the cultural assets by keeping them in the country as well as making them accessible to the general public."
Before Kafka died of tuberculosis at the age of 41 in 1924, he left instructions that his works should be burned. But Brod ignored his request and published some of them.
Those works included The Trial, Metamorphosis and The Castle, which helped turn Kafka into one of the 20th Century's most famous novelists.
Brod smuggled Kafka's writings out of his home city of Prague in 1939, saving them from the Nazis. Brod died in 1968 and bequeathed his collection to his secretary Esther Hoffe.
She had kept the collection in her Tel Aviv apartment as well as in safety deposit boxes in Israel and Switzerland.
The legal battle over who rightfully owned them started after she died in 2007.
Some of the deposit boxes were opened at in Zurich in 2010, but their contents were only revealed to an Israeli judge.
In 2012, a Tel Aviv family court ruled that Brod had explicitly ordered Hoffe to catalogue and transfer his collection "to the library of the Hebrew University in Jerusalem or the Tel Aviv municipal library, or any other public institution in Israel or abroad". The Supreme Court has now agreed with this ruling.
A statement on The National Library website said the materials that the National Library will receive include "correspondences in Kafka's handwriting to Max Brod,  Kafka's Paris journals, drawings, and many of Max Brod's works and the letters to Kafka".
"It is fair to assume that many other treasures are hidden among Max Brod's personal material which will be exposed and catalogued by the National Library.
"As time goes by they will be made accessible in the broadest way for generations to come."

Jac Holmes, from Bournemouth, Joe Akerman, from Halifax, and Irish citizen Joshua Molloy were detained by the Kurdistan Regional Government.
Mr Holmes posted on Facebook: "Got out of jail peeps, thanks for the support."
His mother met with Kurdistan officials on Friday to help secure his release.
The three men had been returning home at the time of their arrest, crossing from Syria into Iraq.
They were held for more than a week in a prison in Erbil.
Mr Ackerman updated his status on Facebook, simply posting: "Free".
"We are helping two British men make arrangements to leave Kurdistan after they were released from custody," a Foreign Office spokeswoman told the BBC.
Confirming the release of Mr Molloy, a former Royal Irish Regiment soldier, Ireland's Foreign Affairs Minister Charlie Flanagan said: "I welcome Joshua's release and I am pleased that he is now on his way home to join his family in Ireland."
We understand the men had been waiting on the border between Syria and Iraq for several weeks trying to cross. However, the border was closed.
They made their way to another point to cross and were arrested and told they were crossing into Iraq illegally.
The border is a politically sensitive zone between Iraq and Syria. The two countries have numerous groups in conflict with one another.
Jac Holmes's mother told me it had been an anxious time as the days passed, and that she had visited Kurdish officials in London to do what she could to get Jac and the other men released.
She wrote "I was prepared to chain myself to the railings" to try to ensure the men's safe passage home.
Kurdish supporters in the UK have rallied around in support Mr Holmes during his time fighting in Syria. He is one of a number of western volunteers fighting with the Kurds.
They call him a "hero", while British officials continue to warn strongly against travelling to any conflict zones.
The British Government maintains that anyone fighting abroad could find themselves breaching UK terrorism laws.
Israel's Supreme Court has ruled that a collection of unpublished Franz Kafka manuscripts must be transferred from an Israeli family to the country's national library.
[NEXT_CONCEPT]
Three men arrested attempting to cross the Iraqi border after joining Kurdish forces to fight the so-called Islamic State group in Syria have been released, the BBC understands.