The three-judge panel agreed with last year's ruling by a federal judge that Trump was using "viewpoint discrimination" in violation of the constitutional rights of people with opposing views.
The court sidestepped the question of the president's free speech rights under the constitution's First Amendment on a privately owned internet platform, but affirmed that Trump had effectively created a public forum for official White House business.
"The First Amendment does not permit a public official who utilizes a social media account for all manner of official purposes to exclude persons from an otherwise-open online dialogue because they expressed views with which the official disagrees," the judges wrote in a 29-page opinion.
The ruling comes in response to a lawsuit filed by a group of Twitter users and the Knight First Amendment Institute at Columbia University, alleging that Trump improperly blocked comments from his political opponents.
Plaintiffs, including a University of Maryland professor, a Texas police officer and a New York comic, said they were blocked from the @realDonaldTrump account after posting tweets critical of his policies.
Trump's legal response is that he is not acting in his official capacity when he blocks users, but the court disagreed.
"The president and multiple members of his administration have described his use of the account as official," the appeals court ruling said.
"We conclude that the evidence of the official nature of the account is overwhelming. We also conclude that once the president has chosen a platform and opened up its interactive space to millions of users and participants, he may not selectively exclude those whose views he disagrees with."
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