The decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals found the law requiring voters to prove their citizenship while registering is inconsistent with the National Voter Registration Act. That federal law allows voters to fill out a mail-in voter registration card and swear they are citizens under penalty of perjury, but doesn't require them to show proof as Arizona's law does.
The ruling left in place a requirement that voters provide proof of identity when casting ballots.
Lawyers for several civil rights groups that sued argued thousands of Arizonans have had their federal registration forms rejected because they failed to provide other documents required by the state. That violates the federal law, they argued.
The state law in question, Proposition 200, was passed by voters in 2004. It required proof of citizenship during voter registration and of identity at the polls, and also while receiving certain state benefits.
It has been upheld by state and federal courts until Tuesday's decision.
In a statement, one of the attorneys who argued the case said his group was "elated" by the decision.
"This will enable the many poor people in Arizona who lack driver's licenses and birth certificates to register to vote," said Jon Greenbaum, legal director for the Lawyers' Committee for Civil Rights Under Law.
Arizona Attorney General Terry Goddard's office issued a statement saying it intends to ask a full panel of 9th Circuit judges to reconsider the case.
The ruling applies only to voter registration and the deadline for voting in the Nov. 2 general election has passed, so it will have no practical effect on voting, the statement said.
Appeals Court Judge Sandra S. Ikuta's opinion was joined by retired U.S. Supreme Court Justice Sandra Day O'Connor, who heard the case as a temporary appeals court judge. Ikuta said the federal voter registration law laid out specific requirements for the mail-in registration form that the state can't make more onerous.