"The free exercise of the right to openly debate sensitive questions that are likely to displease somone is a fundamental aspect of freedom of expression," the judges at the Strasbourg court declared in a ruling against Switzerland in a case brought by a Turkish left-winger.
In 2007 a court in the Swiss city of Lausanne found Dogu Pernicek, the leader of the left nationalist Turkish Workers' Party, guilty of "denying the Armenian genocide for racist motives" in three speeches in Switzerland.
While not denying that thousands were killed in 1915, Pernicek denied that the Ottoman Empire, which ruled Turkey at the time, had genocidal intentions and called the claim "an international lie".
The Lausanne court found that his intention was not to hold a historical debate since the facts of the 1915 Armenian genocide were common knowledge.
Denying, belittling or justifying genocide is a violation of Switzerland's anti-racism laws.
The ECHR declared that it was not their role to judge how serious the massacres were or whether they constituted genocide but recognised that there was not unanimous consensus on the question.
Pernicek did not question the reality of the massacres or deportations of Armenians during World War I, it said, and did not express contempt for their victims.
The European judges drew a distinction between the Armenian massacres and the Nazi holocaust of Jews, arguing that historical evidence, such as the gas chambers, shows a genocidal intent, which has been recognised by international jurisdiction.
Switzerland has three months to appeal, although the court is not obliged to allow one.
The judgement came as France's Le Monde newspaper reported that the French government will present a law banning denial of the Armenian genocide, an election pledge of President François Hollande, to parliament within the next few months.
An official announcement is unlikely until after Hollande has visited Turkey next month but may well be made when he visits Armenia in May, according to Franco-Armenian groups.
That would make it possible for it to be passed on the anniversary of the beginning of the slaughter in April 2015.
France's Constitutional Council ruled a previous law, which enraged Turkey, passed in 2011, unconstitutional.