Egyptian officials say Khouzam was convicted in absentia of murdering a woman and should be returned to face justice.
U.S. officials earlier this year agreed to hand him over, saying they had been assured that he would be treated humanely upon his return, but Khouzam says he was tortured in Egypt.
The American Civil Liberties Union is hailing the court ruling, calling it the first of its kind.
Justice Department officials have not returned a call seeking comment.
