More on the ruling:

At issue was an unwritten California policy requiring officials to automatically bunk inmates by race for the first 60 days after their arrival. After an evaluation for dangerousness, inmates are then assigned to a permanent cell on a nonracial basis. Inmates are separated again by race when they transfer to a new facility.

The suit was brought by a black inmate. The Bush administration supported his position. Interesting, that it was Clarence Thomas and Anton Scalia who dissented:

In a dissenting opinion, Justice Clarence Thomas argued that judgments about whether race-based policies are necessary "are better left in the first instance to the officials who run our nation's prisons."

"The majority is concerned with sparing inmates the indignity and stigma of racial discrimination. California is concerned with their safety and saving their lives," Thomas wrote. He was joined by Justice Antonin Scalia.

In a separate dissent, Justice John Paul Stevens argued "that the prison segregation should be declared outright discriminatory without opportunity for further review."

The case addressed only the 60 day assignment by race imposed upon arrival. But, given this language, it probably applies to much more:

"It is not readily apparent," the majority said, "why, if segregation in reception centers is justified, segregation in the dining halls, yards, and general housing areas is not also permissible."

ScotusBlog has more on the ruling.

Update: Were California officials truthful in telling the Supreme Court this only applied to the first 60 days? And what about Nevada, which has a segregationist inmate housing policy at one of its prisons.