"The court finds that the Dutch state acted unlawfully," judge Gepke Dulek said in an hour-long ruling, which largely upheld a 2014 ruling by a lower court.
"The conclusion is that the Dutchbat (Dutch peacekeepers) knew that during the evacuations by the Bosnian Serbs to separate the Muslim men and boys there was a real risk they could face inhumane treatment or execution," she said.
The Dutch soldiers had also facilitated the separation of the men and the boys among the refugees, she added.
Almost 8,000 Muslim men and boys were killed in the 1995 genocide, Europe's worst atrocity since World War II.
It occurred on July 13, 1995 when lightly armed Dutch UN peacekeepers were overrun by Bosnian Serb forces as they sought to protect tens of thousands of refugees who had flooded to their base in what was meant to be a UN safe haven.
Both the Dutch state and the relatives of victims had appealed the 2014 Dutch lower court ruling that the state was liable for the deaths of some 350 men who were sent off the base along with other refugees.
Tuesday's ruling also found that the Dutch state is liable for some 30 percent of any damages awarded, as it was uncertain whether the men would have survived had they stayed inside the compound.
The Srebrenica killings have been denounced as an act of genocide by the UN court set up in The Hague to try those behind the atrocities of the Balkans wars.
And in the Netherlands the events still stir controversy, with questions remaining over the Dutch blue helmets' role.
Late Monday, a lawyer for 206 former Dutch peacekeepers said they were suing the government for damages for sending them to defend Srebrenica, after the defence minister last year admitted it had been a "mission impossible."
"As from tomorrow (Tuesday), 206 of my clients are claiming compensation of 22,000 euros each," their lawyer told Dutch late night talk show Jinek on Monday.
Total damages would amount to around 4.5 million euros.
The Dutch troops, entrenched in their base, had taken in thousands of refugees from the enclave.
But overwhelmed they first shut the gates to new arrivals, and then allowed the Bosnian Serbs to evacuate the refugees. The men and boys were separated and taken in buses to their deaths.
Defence Minister Jeanine Hennis-Plasschaert last year admitted the battalion had been sent to Bosnia "without adequate preparation... without the proper means, with little information, to protect a peace that no longer existed."
"It was an unrealistic mission, in impossible circumstances," she said.
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