WASHINGTON—President Barack Obama is under increased pressure to decide the fate of the Keystone XL pipeline after a Nebraska court on Friday threw out a challenge to the long-disputed project and the House passed a bill approving it.

Since last April, the Obama administration has cited the court case over the pipeline’s proposed route through Nebraska as the reason Mr. Obama hasn’t acted on the project. Administration officials have also pointed to a continuing State Department review to explain Mr. Obama’s threat to veto a congressional bill on the pipeline, which garnered a 266-153 vote and now heads to the Senate.

The proposed pipeline—which would move up to 830,000 barrels of oil a day from Canada’s oil sands to Gulf Coast refineries—has become a political flash point over climate change and economic growth. TransCanada Corp., the company behind the project, submitted its permit application in 2008 to the State Department, which has jurisdiction over cross-border pipelines.

The Nebraska ruling sets in motion what is expected to be the final chapter of the yearslong review, but when and how it will end remain uncertain. A State Department spokeswoman said Friday there was no timeline to complete the agency’s review, indicating it could be months before an administration decision comes.

“The president believes the process should unfold at the State Department,” White House spokesman Eric Schultz said Friday. “We’re going to wait for that review to be completed before the president makes any decisions.”