The new ban, signed by President Trump on March the 6th, aimed to overcome legal problems with a January executive order that caused chaos at airports and sparked mass protests before a Washington judge stopped its enforcement in February.
US District Judge Derrick Watson has now stopped the new order following a lawsuit filed by the state of Hawaii, which argued that it discriminates against Muslims in violation of the US Constitution.
President Trump says the policy is critical for national security and does not discriminate against any religion, and he's vowed to fight on.
"This ruling makes us look weak - which by the way, we no longer are. Believe me. Just look at our borders. We're going to fight this terrible ruling, we're going to take our case as far as it needs to go, including all the way up to the Supreme Court."
Mr Trump also took aim - again - at the media, questioning its ability to report his views on the travel ban in a balanced manner.
"I have to be nice, otherwise I'll get criticised for speaking poorly about our courts. I'll be criticised by these people (points to reporters) -- among the most dishonest people in the world -- I will be criticised. I'll be criticised by them for speaking harshly about our courts, I would never want to do that."
President Trump's first travel order was more sweeping than the revised order.
Like the current one, it barred citizens of Iran, Libya, Syria, Somalia, Sudan and Yemen from entering the country for 90 days, but it also included Iraq, which was subsequently taken off the list.
Refugees were blocked from entering the country for 120 days in both orders, but an indefinite ban on all refugees from Syria was dropped in the new one.
The revised ban also excluded legal permanent residents and existing visa-holders.
Hawaii's Attorney General, Doug Chin, says his state decided to take a stand against the revised order because it discriminates against people based upon their nation of origin or based upon their religion.
"That's the big reason why Hawaii brought this case because it's really something that hits us to the core. If you have an order that's coming out there, that's taking us back half a century to a time when there was discrimination by nations of origin or by religion, that's something that we have to speak up against."
The case is one of several moving through US courts brought by states' attorneys-general and immigrant advocacy groups.
Washington state Attorney General Bob Ferguson welcomed the ruling.
"That's exactly what we're seeking, exactly what Matt North of the Immigrant Rights Project is seeking, exactly what the plaintiffs in the case in Maryland are seeking, what all my colleagues -- states like New York, California, Maryland, Massachusetts, Oregon -- what we are all seeking. So it's fantastic news."
The Department of Justice says it will continue to defend its Executive Order in the courts, calling the judge's ruling flawed in reasoning and in scope.
Paul Ryan, the Republican Speaker of the US House of Representatives, says the ban is needed to improve vetting of people entering the United States in order to prevent attacks.
He says he has no doubt that it will be upheld by higher courts.
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