District Judge Derrick Watson cited “questionable evidence” in the government’s argument that the ban was a matter of national security.
President Donald Trump described the ruling as “unprecedented judicial overreach”.
The executive order would have placed a 90-day ban on people from six mainly Muslim nations and a 120-day ban on refugees.
President Trump insists the move is to stop terrorists from entering the United States, but critics say it is discriminatory.
An earlier version of the order, issued in January, sparked confusion and protests, and was blocked by a judge in Seattle.
Judge Derrick Watson said the court had established a strong likelihood that, were the ban to go ahead, it would cause “irreparable injury” by violating First Amendment protections against religious discrimination.
Hawaii had argued that the ban would harm tourism and the ability to recruit foreign students and workers in the state.
The 43-page ruling argued that a “reasonable, objective observer” taking into account the context of the Executive Order would conclude it “was issued with a purpose to disfavor a particular religion”.
It notes statements made by Donald Trump such as a 2015 press release calling for “a total and complete shutdown of Muslims entering the United States”, and his adviser Rudolph Guiliani, who said in a TV interview in January: “When [President Trump] first announced it, he said, <<Muslim ban>>. He called me up. He said: <<Put a commission together. Show me the right way to do it legally>>.”
It also says there is a “dearth of evidence indicating a national security purpose”.
Speaking at a rally in Nashville, Tennessee on March 15, Donald Trump said the ruling in Hawaii was “flawed” and a case of “unprecedented judicial overreach”.
The Trump administration argues that the constitution gives the president the power to suspend immigration when he deems it to be in the national interest of the country, and that neither the initial or revised orders discriminate on the basis of religion.
DoJ lawyers argue that the revised ban is an extension of President Barack Obama’s move towards stricter screening of travelers from the six countries.
Donald Trump said he will take the case “as far as it needs to go”, including to the Supreme Court.
An appeal against the Hawaii decision would be expected to go next to the Ninth Circuit Court of Appeals – the same court which in February said it would not block a ruling by a Seattle court to half the original travel ban.
However, also on March 15, five judges at that court wrote a letter saying they believed that decision was an “error”, and the first Executive Order was “well within the powers of the presidency”.
California, Maryland, Massachusetts, New York, Oregon and Washington are all taking part in legal actions against the revised ban.
Washington state Attorney General Bob Ferguson, who is attending a court hearing in Seattle in his efforts to block the travel ban, described the ruling as “fantastic news”.
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