Amnesty International in Hawaii says the state is right to challenge the legality of the United States' so-called travel ban because of the huge impact it has on refugees.
Last month, the US Supreme Court let the Trump administration's executive order banning people from six Muslim-majority countries for 90 days go forward with a limited scope.
The restrictions ban grandparents.
The state had filed a motion in the US District Court hoping to include grandparents and other relatives, but that was rejected on Friday.
The chair of Amnesty International Hawaii Beatriz Cantelmo said the ban was discriminatory and very dangerous.
"The problematic aspect of the ban has to do with the Trump administration not recognising refugee resettlement agencies as having bona fide relationships for the purposes of the refugee ban implementation. And this decision means that for the tens of thousands of refugees in the process of resettlement to the United States may not be able to come here."
Beatriz Cantelmo said the ban fuelled anti-Muslim sentiment and endangered people who were trying to escape violence in their homelands.
Hawaii said it planed to appeal against the court ruling.