A Pentagon policy illegally banned transgender troops from military service, a divided panel of federal appeal court judges ruled on Monday in another legal setback for President Donald Trump’s sweeping agenda.

The majority opinion — by a three-judge panel from the U.S. Court of Appeals for the District of Columbia circuit — held that the Trump administration’s policy was designed to exclude people from the military based on their gender identity.

The ban will remain in effect for now. The U.S. Supreme Court let it go through last year as litigation continues to play out, and the appeals court put their own ruling on hold to allow for appeals. It would apply to plaintiffs serving in the miliary, but not those seeking to join. So the military would be able to prevent new transgender people from enlisting.

The appeals court panel’s 2-1 decision largely upholds a March 2025 ruling by U.S. District Judge Ana Reyes in Washington, D.C. Reyes concluded that Trump’s executive order to exclude transgender troops from military service likely violates their constitutional rights.

The administration appealed after Reyes issued a preliminary injunction requested by attorneys for several transgender people who are active-duty service members and others seeking to join the military. The appeal court’s majority decided that the injunction should be narrowed to the plaintiffs currently serving in the military but not those trying to enlist.

Another lawsuit challenging the ban was filed in Washington state and led to a ruling in favor of the plaintiffs challenging the policy in that case