Hamas welcomed the decision by Egypt, which faces an islamist insurgency it says is fueled by weapons smuggled from Gaza. Hamas said the ruling would help relations with Cairo.
Hamas is an offshoot of Egypt's Muslim Brotherhood which the authorities have declared a terrorist group and have repressed since the army ousted one of its leaders, Mohamed Mursi, from the presidency in 2013.
Cairo has for many years played a central role in engineering ceasefires between neighboring Israel and Hamas, which dominates Gaza, including a truce reached between the sides in August that ended a 50-day war.
Egyptian officials say weapons are smuggled from Gaza into Egypt where they end up with militant groups fighting to topple Cairo's Western-backed government.
Islamist militants based in Egypt's Sinai region, bordering Gaza and Israel, have killed hundreds of police and soldiers since Mursi's political demise following protests against his rule. The insurgency has spread to other parts of Egypt, the most populous Arab country.
CRACKDOWN
The lawyer who first raised the case against Hamas told Reuters he would request that Egypt's Foreign Ministry place Hamas on its list of terrorist organizations, based on previous judicial decisions.
"This ruling does not return us to zero. I have two rulings placing the Brotherhood and the Izz ad-Din al-Qassam Brigades on the list of terrorist organizations," Ashraf Farahat said.
Qassam Brigades, the armed wing of Hamas, was classified as a terrorist organization by Egypt in January.
The Brotherhood was banned in 2013 following Mursi's ouster as part of a crackdown including many liberal and secular activists.
Hamas spokesman Sami Abu Zuhri welcomed Saturday's decision as "correcting a previous mistake".
"The decision today represents a commitment by Cairo to its strong role toward the Palestinian cause. There is no doubt that (it) will have positive results and impacts on the relation between Hamas and Cairo," he told Reuters.
Hamas had rejected previous judicial rulings, while the Brotherhood maintains it is committed to peaceful activism and rejects links to violence.
Separately, the trial of two Egyptian policemen accused of killing a lawyer in custody began on Saturday.
The case is a rare action against members of the country's security forces. Rights groups accuse the police of abuses, which the government denies.
