The ruling stems from a case from Philadelphia where a woman sued the humane organization after they confiscated two of her dogs and later euthanized them.
A jury sided with the woman and awarded her $155,000 in damages. The PSPCA appealed the case leading to the high court's decision.
State justices said Tuesday that although the organization was created by the state's General Assembly to enforce Pennsylvania's animal laws, they don't believe the legislature meant to grant the PSPCA agency status.
Government agencies are immune from civil lawsuits.
The dog owner, Laila Snead of Reading, says she's pleased with the decision but that money won't bring her dogs back.
A PSPCA spokeswoman says the group is disappointed with the ruling because of its far-reaching implications.