This article explores Lauterpacht’s understanding of state sovereignty and its importance today. To this end, it presents intellectual roots of Lauterpacht’s legal thought that is both negative inspiration of his teaching (legal positivism) and the leading role in his work of Grotian and Victorian tradition embodying ideas of natural law, liberalism and progress, supported by Kelsen’s epistemology. Lauterpacht rejects legal positivism, which underlines a freedom of action of states, and, consequently, dependence of international law on state sovereignty. What he deems as relevant is the inverse dependence ‐ sovereignty stems from international law. The idea of sovereignty performs an important cognitive function by indicating the absence of legal interdependencies between states. Sovereignty is not an absolute, rigid category, but a bundle of rights conferred on states by international law. Such a nominalist approach to sovereignty is today noteworthy all the more because it counters mythology of state and its sovereignty. Yet, the more crucial aspect of Lauterpacht’s idea of sovereignty concerns the position of individuals. His view that human beings should be treated as ultimate subjects of law and that sovereignty means not only rights but also state responsibility is today strongly supported in academia and by some political initiatives.