A 10-page document by the District Court for the Northern District of California on Friday came weeks after a preliminary injunction by the same court, which is overseeing a pair of lawsuits over border wall financing, reports Xinhua news agency.
On May 24, the court temporarily blocked Trump's ability to divert $1 billion in funding toward border walls in state of New Mexico and Arizona.
Led by California, a coalition of 20 states filed a motion in April for a preliminary injunction to block the Trump administration from taking up to $6.7 billion in federal taxpayer funds to build a wall along the US-Mexico border.
The motion challenged Trump's "illegal and unconstitutional action" to divert taxpayer funding and resources meant for law enforcement, drug interdiction, and military construction projects for the wall.
California Attorney General Xavier Becerra on Friday issued a statement celebrating the court's newest decision in favour of the Golden State.
"These rulings critically stop President Trump's illegal money grab to divert 2.5 billion dollars of unauthorized funding for his pet project," said Becerra.
"All President Trump has succeeded in building is a constitutional crisis, threatening immediate harm to our state. President Trump said he didn't have to do this and that he would be unsuccessful in court. Today we proved that statement true," said the Attorney General.
( With inputs from IANS )