Any payments to athletes would not be immediate. The ruling said regulations on pay will not take effect until the start of the next FBS football and Division I basketball recruiting cycle. Wilken said they will not affect any prospective recruits before July 1, 2016.
Lawyers for O'Bannon and the 19 others had sought to have millions of dollars put in trust funds for the athletes. Former athletes will not be paid, because they gave up their right to damages in a pretrial move so the case would be heard by a judge, not a jury.
"I'm excited and trying to keep it all together," O'Bannon said. "When we decided to take on this case [in 2009], we knew it would be a marathon, that it would get people talking -- and that hopefully talk would spark change. And here we are.
"I hope that the players get what they deserve, with all the billions they are helping make for college sports."
The NCAA said in a statement that it disagreed with the decision but was still reviewing it.
"We disagree with the Court's decision that NCAA rules violate antitrust laws," NCAA chief legal officer Donald Remy said in a statement. "We note that the Court's decision sets limits on compensation, but are reviewing the full decision and will provide further comment later. As evidenced by yesterday's Board of Directors action, the NCAA is committed to fully supporting student-athletes."
Bill Isaacson, co-lead counsel for the plaintiffs, who examined NCAA president Mark Emmert during the trial, said he was pleased with the verdict.
"This is a major step towards decency for college athletes," he said. "The judge's decision strikes down NCAA rules restricting their compensation and permits reasonable but significant sharing with athletes -- both for the costs of education and to establish trust funds -- from the billions in revenues that schools earn from their football and basketball players."
Sonny Vaccaro, the former athletic shoe representative who recruited O'Bannon to launch the suit, said it was a huge win for college athletes yet to come.
"The kids who are going to benefit from this are kids who don't even know what we did today," Vaccaro said. "It may only be $5,000 but it's $5,000 more than they get now. The future generation will be the benefactor of all this. There are now new ground rules in college sports."
As part of her ruling, Wilken rejected both the NCAA's definition of amateurism and its justification for not paying players. But she did not prohibit the NCAA from enforcing all its other rules and regulations, and said some restrictions on paying players might still serve a limited purpose if they are necessary to maintain the popularity of major college football and basketball.
However, she said she will enter a permanent injunction prohibiting "certain overly restrictive restraints."
The case could be appealed. The NCAA previously said it would take the issue all the way to the Supreme Court.
The ruling comes after a five-year battle by O'Bannon and others on behalf of college athletes to receive a share of the billions of dollars generated by college athletics' huge television contracts. O'Bannon, who was MVP of the 1995 UCLA national championship basketball team, said he signed on as lead plaintiff after seeing his image in a video game authorized by the NCAA that he was not paid for.