A European Union court in Luxembourg has ordered the Palestinian group Hamas be removed from the EU "terrorist list" for procedural reasons.
The court ruled the listing of Hamas as a "terrorist organization" was based on media reports, not analysis.
But the bloc's second highest tribunal said member states can keep Hamas's assets frozen for three months to give time for further review or for an appeal.
The Islamic militant group, which calls for the destruction of Israel, hailed the decision.
"This decision corrects an historic mistake against the Palestinian resistance, one that deemed Hamas was with terror, and we have always demanded the world to distinguish between terror and resistance, which is a legitimate right for all nations. Today, we see a strong, good shift and hope it will develop to include all Europe, to take a strong decision to remove Hamas from the terror list. We are are demanding to expose the crimes of the occupation and its leaders against the Palestinians."
But Israeli Prime Minister Benjamin Netanyahu says the ruling showed "staggering hypocrisy" toward a Jewish state.
"Today we witnessed staggering examples of European hypocrisy. Hamas that has committed countless war crimes and countless terror acts. It seems that too many in Europe, on whose soil six million Jews were slaughtered, have learned nothing. But we in Israel, we've learned. We'll continue to defend our people and our state against the forces of terror and tyranny and hypocrisy."
The United States has urged the European Union to maintain its sanctions on Hamas.
The EU's foreign policy arm said the bloc will continue to view Hamas as a terrorist group. A spokesperson says it is considering the next step.
Hamas holds sway in the Gaza Strip.
Most Western countries say it is a terrorist organization, pointing to years of rocket strikes out of Gaza and waves of suicide attacks, primarily between 1993 and 2005.
