A federal judge told the University of Iowa its non-discrimination policy had not been applied consistently but "selective enforcement" had been employed against Business Leaders in Christ (BLinC).
Judge Stephanie M Rose gave bosses 90 days to reinstate the organisation. They may also decide to appeal against the decision.
BLinC took the University of Iowa to court in December last year, claiming a ban on meeting amounted to religious discrimination.
The group was banned from campus after a homosexual student claimed he was prevented from becoming a leader because of his sexual orientation.
In its mission statement, BLinC requires leaders to conduct themselves "without the greed, racism, sexual immorality, and selfishness that all too often arise in business, political, and cultural institutions."
The group was quoted by the Washington Times last month as saying: "BLinC declined the student's request because he expressly stated that he rejected BLinC's religious beliefs and would not follow them."
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