"Immigration, even for the president, is not a one-person show", the judges said, adding: "National security is not a "talismanic incantation" that, once invoked, can support any and all exercise of executive power".
The ruling from a unanimous three-judge panel of the 9th US Circuit Court of Appeals deals the administration another legal defeat as the Supreme Court considers a separate case on the issue.
The Trump administration made the case that terrorists could exploit possible weaknesses in the nation's screening and vetting procedures as it reviews them.
A USA appeals court on Monday upheld a decision to block President Donald Trump's controversial travel ban targeting citizens from six Muslim majority nations - the latest in a string of stinging judicial blows for the Republican billionaire.
Hawaii Attorney General Doug Chin, who sued to stop the travel ban, said the 9th Circuit ruling "really shows that we have three branches of government and that there are checks and balances".
"President Trump's Executive Order is well within his lawful authority to keep the Nation safe", Sessions stated.
Trump revised that order - removing Iraq from the list of banned countries, eliminating the indefinite ban on Syrian refugees and deleting language that gave preference to religious minorities when the refugee program resumed - to address the court's concerns. "Unfortunately, this injunction prevents the President from fully carrying out his Article II duties and has a chilling effect on security operations overall".
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Last week, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties with Qatar amid a slew of punitive measures. Trump sided with Qatar's antagonists, calling on the Gulf state to stop "the funding of terrorism".
Trump has insisted the ban is legal and questioned his own lawyers for bowing to court rulings by issuing a "watered-down" version that was also blocked by courts.
The Trump administration on June 1 asked the U.S. Supreme Court to block the Hawaii and Richmond rulings and revive the ban.
"The president must make a sufficient finding that the entry of these classes of people would be 'detrimental to the interests of the United States, '" Monday's ruling states.
The court's decision is the latest blow to Mr Trump's efforts to shut down travel from several predominantly Muslim countries.
The judges largely affirmed a Hawaii judge's decision from March which found the core provisions of the revised executive order - temporarily blocking all refugees and foreign nationals from six Muslim-majority countries from entering the USA - likely violated the Constitution because its primary objective was to disfavor Muslims.
The judges say the president violated USA immigration law by discriminating against people based on their nationality and that Trump failed to show their entry into the country would hurt American interests.
The 4th U.S. Circuit Court of Appeals in Virginia also ruled against the travel ban May 25, citing the president's campaign statements as evidence that the 90-day ban is "steeped in animus and directed at a single religious group". Chief Judge Roger Gregory wrote that the district court improperly applied it to Trump, noting that the Supreme Court says such action should only be permitted "in the rarest of circumstances".
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