Jurisdiction is a broad legal term that means the authority of a court to hear and determine a controversy (subject matter jurisdiction) as well as its authority to bind the parties in the action (personal jurisdiction). Before a court can exercise subject matter jurisdiction, it must have personal jurisdiction of the parties; otherwise, any judgment rendered by it is null and void. The jurisdiction of a court is derived from constitutional provisions or from statute. Federal courts are courts of limited jurisdiction. They can exercise only the jurisdiction they were specifically given by the Constitution or federal law. Article III of the Constitution establishes the exclusive jurisdiction of federal courts in all cases, whether based on law or equity, that arise under the Constitution or laws or treaties of the United States; that involve ambassadors, consuls, and other public ministers, admiralty and maritime claims, or the United States as a party; or that arise between two or more states, between a state and a citizen of another state, between citizens of the same state claiming lands under grants of different states, or between a state or its citizens and foreign states, citizens, or subjects. This article specifically gives the Supreme Court original jurisdiction to try cases affecting ambassadors, public ministers, and consuls and cases in which a state is a party. In all other cases, the Supreme Court has appellate jurisdiction: it can review the decisions rendered by courts in which the action was tried or subsequently heard on appeal.

The power of a federal court to hear matters arising under the Constitution, federal law, or treaty is called federal question jurisdiction. Its diversity-of-citizenship jurisdiction empowers it to determine controversies between parties who are citizens of different states. The controversy must have a value of more than $75,000 in order for the court to exercise either federal question or diversity jurisdiction. The $75,000 figure is known as the jurisdictional amount. Federal district courts have original jurisdiction to try these disputes.

Federal district courts currently have original and exclusive jurisdiction to entertain bankruptcy cases and prize cases, which determine the rights in ships and cargo captured at sea. Other controversies that are within the jurisdiction of federal courts include interpleader actions involving citizens of different states where the item in dispute is worth $500 or more; postal matters; and copyright, patent, and trademark cases based on federal law. Federal district courts are also authorized by statute to remove actions from state courts to themselves when the disputes could have been brought in such courts originally. See also Removal.

The regional courts of appeals have statutory appellate jurisdiction to review final decisions and specified interlocutory orders rendered by district courts and administrative determinations made by federal agencies. Interlocutory orders are reviewable in the following situations: when they (1) affect existing injunctions in cases where there is no direct review in the Supreme Court; (2) appoint receivers, refuse to do so, or affect the sale or disposal of property; (3) determine the rights and liabilities of parties in admiralty cases in which appeals from final decree are permissible; or (4) are issued in a bankruptcy action. The courts of appeals also review judgments in civil actions for patent infringement that are final except for an accounting, and judgments rendered in bankruptcy cases. The United States Court of Appeals for the Federal Circuit has specialized appellate jurisdiction.

No federal court has jurisdiction to entertain political questions or to issue advisory opinions, since neither constitutes a case or a controversy, one of which must exist if a federal court is to exercise its jurisdiction. Federal courts are also powerless to determine matters that are beyond the scope of their jurisdiction, such as cases involving domestic relations or wills, which are exclusively within the jurisdiction of state courts.