US District Judge Kathryn Kimball Mizelle said the national public health agency had exceeded its legal powers in issuing the mandate.
In response, the US transit authority said it would now no longer enforce mask-wearing.
The US Centers for Disease Control and Prevention (CDC) just last week extended the mandate until May 3.
Judge Mizelle is based in Florida, but federal rulings can block nationwide government policies.
The latest ruling effectively removes mask-wearing requirement in all airports, trains, taxis and transit hubs.
US President Joe Biden
Henry Nicholls
White House Press Secretary Jen Psaki
JONATHAN ERNST
Calling the decision “disappointing”, White House press secretary Jen Psaki noted that the CDC still recommends travellers cover their mouths and noses.
The lawsuit was first brought in July 2021 by the Health Freedom Defense Fund (HFDF) group and two Florida residents who said wearing masks increased their anxiety and panic attacks.
They argued that the CDC mandate was "arbitrary and capricious" because it gave exemptions to certain groups but not to others.
In her ruling, Judge Mizelle, who was appointed by ex-US President Donald Trump, found that the CDC had improperly invoked the "good cause exception”.
She wrote: "Because our system does not permit agencies to act unlawfully even in pursuit of desirable ends, the Court declares unlawful and vacates the Mask Mandate."
Shortly after the decision was issued, the Transportation Security Administration, responsible for running US airport security, confirmed it would no longer enforce the mask mandate.
American Airlines, Delta Air Lines, Alaska Airlines and United Airlines said face coverings will no longer be required on domestic flights and some international flights.
Since the CDC first issued a public health order in February 2021, more than 7,000 unruly passenger incidents have been reported.
Around 70 percent of these involved mask-wearing rules, according to the Federal Aviation Administration.
It comes after the Supreme Court blocked the White House from enforcing its vaccine-or-test rule for employees at large private companies.
But the Biden administration's requirement that all federal employees be vaccinated was upheld on appeal earlier this month.
