The court adjourned on Sunday afternoon as judges retired to consider their decision.
Chief Justice Allsop said the three judges had unanimously ruled to uphold the government's cancellation of Djokovic's visa.
Chief Justice James Allsop said the court will not be able to give full reasons for the decision on Sunday but the court hopes to indicate what it is proposing to do.
The court also ordered that Djokovic pay the government’s legal costs for the hearing.
The decision means that Djokovic, who is not vaccinated against COVID-19, is likely to remain in immigration detention in Melbourne until he is deported.
Following a procedural hearing on Saturday, Djokovic was photographed returning to Carlton's Park Hotel, an immigration facility the Serbian was held at after his visa was first cancelled.
There are currently 32 asylum seekers and refugees detained at the Melbourne immigration detention centre.
Many of the men at the facility have been in Australia's immigration system for nearly a decade and have not been allowed to leave detention centres during legal battles.
A fire broke out at the facility in recent weeks and detainees have reported being given meals with maggots and mould to eat. It's also been the site of a COVID-19 outbreak, where half of the detainees and around 20 staff became infected.
'Djokovic's presence may lead to more anti-vax sentiment'
Djokovic arrived in the country last Thursday for the Australian Open, when he was detained by border officials and had his visa cancelled.
Australia's pandemic response has included an insistence a visa holder must be double-vaccinated or show acceptable proof they cannot be vaccinated to enter quarantine-free.
While the first cancellation was later overturned by a federal court on fairness grounds, Djokovic was faced with uncertainty over his future in the Australian Open with the possibility of a second visa cancellation from the immigration minister.
In court documents uploaded online on Saturday, it was revealed Mr Hawke cancelled Djokovic's visa for the second time as he believed the tennis star's presence in Australia may "foster anti-vaccination sentiment" and "civil unrest".
“I consider that Mr Djokovic’s ongoing presence in Australia may lead to an increase in anti-vaccination sentiment generated in the Australian community, potentially leading to an increase in civil unrest of the kind previously experienced in Australia with rallies and protests which may themselves be a source of community transmission,” he said.
Mr Hawke also said allowing Djokovic to stay in Australia could lead to "other unvaccinated persons refusing to become vaccinated" or reduce Australia's uptake of COVID-19 booster jabs.
“I am concerned that his presence in Australia, given his well-known stance on vaccination, creates a risk of strengthening the anti-vaccination sentiment of a minority of the Australian community," he said.
Mr Hawke also noted Djokovic's "apparent disregard" for the need to isolate after testing positive. The Serbian has admitted to attending an interview and photoshoot in the days after contracting the virus last month.
Djokovic's lawyers, however, said the minister was "patently irrational" in not considering that kicking the tennis star out of the country would also excite the same anti-vaccination sentiments.
They also said Mr Hawke "cited no evidence" to support the idea Djokovic's presence in Australia could foster anti-vaccination sentiment.
Djokovic's lawyers filed an amended application on Saturday afternoon, adding a third ground for dismissal.
They said they will also argue it was not open to the minister to make findings that Djokovic had a "well-known stance on vaccination".
The finding was based on statements made by Djokovic in 2020 and the minister did not seek Djokovic's current views on vaccination, Djokovic's lawyers added.
With Evan Young and AAP.