The US Court of Appeals for the Ninth Circuit largely upheld an injunction on the ban issued by a lower court, but however said the government was within its right to review the vetting process for people entering the country.
"Immigration, even for the president, is not a one-person show," the ruling said. "The president, in issuing the executive order, exceeded the scope of the authority delegated to him by Congress."
The decision came just ahead of a deadline for states challenging the ban to submit briefings before the US Supreme Court in response to the Trump administration's request that the nine justices hear the case.
The US Justice Department filed an emergency application to the Supreme Court on June 1, urging it to undo two lower court rulings blocking Trump's decision to prevent entry to travelers from Iran, Libya, Somalia, Sudan, Syria and Yemen for 90 days.
The Trump administration argues the ban is needed to ward off terrorist attacks in the country.
Critics say the ban is discriminatory and violates the US constitution by specifically targeting Muslim-majority countries.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)