A judicial source said judge Mohammed Abdel Ghani found that "the permanent presence of interior ministry police units in the midst of campus security reduced the independence of universities guaranteed by the constitution."
It ruled that security duties on campus should be the responsibility of the education ministry.
The lower court had issued its decision after a group of professors demanded in 2008 that the interior ministry withdraw its units from campuses, accusing them of intervening in academic and student affairs.
Egypt has been under a continuous state of emergency since Islamist militants assassinated president Anwar Sadat in 1981, giving the interior ministry broad powers of arrest and detention.
The government said earlier this year it would restrict the emergency law to terrorism and narcotics cases.
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