The 2-1 decision is seen as a major victory for the National Rifle Association, the Chicago Tribune reported.
"A Chicagoan is a good deal more likely to be attacked on a sidewalk in a rough neighborhood than in his apartment on the 35th floor of the Park Tower," Appellate Judge Richard Posner wrote.
"We are disinclined to engage in another round of historical analysis to determine whether 18th-century America understood the Second Amendment to include a right to bear guns outside the home. The Supreme Court has decided that the amendment confers a right to bear arms for self-defense, which is as important outside the home as inside."
The court then gave the state Legislature 180 days to craft a new law with "reasonable limitations."
Second Amendment Foundation attorney David Sigale labeled the decision "historic."