"The court bans the activities of the Muslim Brotherhood organisation and its non-governmental organisation and all the activities that it participates in and any organisation derived from it," said the presiding judge Mohammed al-Sayed.
The court also ordered the interim government to seize the Brotherhood's funds and form a panel to administer its frozen assets until any appeal has been heard.
The lawsuit was filed by the leftist Tagammu Party, Ahram Online reported.
The 85-year-old Islamist movement was banned by Egypt's military rulers in 1954, but registered itself as an NGO in March 2013 in response to a court case brought by opponents who contested its legal status.
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The Brotherhood also has a legally registered political wing, the Freedom and Justice Party (FJP), which was set up in 2011 as a "non-theocratic" group after the uprising that forced President Hosni Mubarak from power.
The authority's recommendations, which are non-binding, were made in accordance with an Egyptian law that prohibits non-government organisations and institutions from forming paramilitary groups.
Egyptian authorities launched a crackdown against the group following the ouster of president Morsi, who hails from the group, by the military on July 3 after mass protests against him and the group.