A judge said doing so would violate the section of Charter of Rights and Freedoms.
Queen's Bench Justice Donald Layh wrote in his decision that the law only requires funding to Catholic schools "to the extent they admit students of the minority faith".
The Saskatchewan Catholic School Boards Association responded to the decision and said it's "...obviously disappointed with Justice Layh's decision".
It added: "This greatly affects parents in Christ the Teacher's School Division in particular, and families throughout the province".
The judge's decision comes after a 12-year court battle, known as the Theodore case, between Good Spirit School Decision (GSSD) and Christ the Teacher Roman Catholic Separate School Division (CTRCSD) / the government of Saskatchewan.
According to the school board's website, GSSD filed a complaint in 2005 that alleges the creation of CTRCSD after the closure of Theodore Public School (GSSD's school) did not meet the "criteria of being a separate school-serving Catholics who are the minority religion in the region".
The plaintiff alleges that CTRCSD was started only to prevent children from being bussed to a nearby town because Theodore Public School closed.
The Saskatchewan Catholic School Boards Association states: "Their argument is that per student grants paid to a Catholic school division for non-Catholic students is discriminatory against public schools under the Charter of Rights and Freedoms.
"Basically, that non-Catholic students should not be able to attend a Catholic school.
"They are not disputing the validity of accepting per-student funding for Catholic students attending public schools."
The school board association said that it will take time to go over the 230-page decision to see what it means for Catholic education in the province and for families who choose Catholic education.
Its statement went on to say: "This has already been a 12-year journey, instigated by the public boards, and we don't have much of an appetite to spend more on legal defence.
"However, we have an obligation to stand up for the constitutional rights of separate school divisions, so we are giving serious consideration to an appeal.
"In the event of an appeal, a final decision would be a long way down the road."
The judge gave the Saskatchewan province until 30th June, 2018 to stop the funding.