Mr Justice Treacy held that the DUP minister breached the ministerial code by failing to take the issue before the Northern Ireland Executive.
The verdict on gay blood donation, in a challenge brought by an unidentified homosexual man, represents a major victory for campaigners seeking equal status with the rest of the UK.
The complete prohibition - put in place during the 1980s AIDS threat - was lifted in England, Scotland and Wales in November 2011.
It was replaced by new rules which allow blood from men whose last sexual contact with another man was more than a year ago. The 12-month deferral was left in place following a Government Advisory Committee report.
It identified a much shorter period during which infection with blood-borne viruses could not be detected.
Mr Poots maintained the ban in Northern Ireland on the grounds of ensuring public safety.
But a gay man, granted anonymity due to his perceived vulnerability, launched a judicial review challenge to Mr Poots' position.
Applying different standards to imported blood defeats the whole purpose of a permanent deferral.
Mr Justice Treacy
Mr Justice Treacy heard claims that the Minister had displayed apparent bias which went beyond religious beliefs and into the realms of prejudice.
It was revealed in court that, despite the unidentified applicant's sexual orientation, he has become a born-again Christian who now disapproves of homosexual practices.
Attorney General John Larkin QC, the chief legal adviser to the Stormont Executive, questioned the legitimacy of the challenge.
He claimed it was a waste of time because the applicant had previously had sex for money.
Mr Larkin rejected arguments that the issue required full Executive approval and questioned whether the Minister had made a decision to maintain the current ban.
However, Mr Justice Treacy pointed out that in continuing the lifetime deferral policy the Minister had deviated from the position taken in England, Scotland and Wales.
He said the decision was made against the Secretary of State's recommendation that the report from the advisory committee on the Safety of Blood, Tissues and Organs (SaBTO) should be followed.
The judge held that the additional risk from deferring donation for 12 months instead of permanently was very minimal.
He said: "The Minister has decided that MSM (males who have sex with other males) behaviour creates such a high risk of infection to the donor that such donors must be permanently deferred, with the result that such blood cannot enter the Northern Ireland blood stock.
"Importing blood from other places which do accept MSM donors, even in limited quantities, leaves the door open for MSM blood to do just that.
"There is clearly a defect in reason here."
Declaring the decision irrational, he said: "If there is a genuine concern about the safety of MSM donated blood such that the blood stock must be protected absolutely from such blood, then the security of that blood must actually be maintained absolutely."
The Minister is aware of the judgement document and will read and consider it.
Department of Health
Dealing with the alleged breach of the Ministerial Code, Mr Justice Treacy said the lifetime ban was both controversial and cross-cutting, taking in equality issues.
"As such, the Minister had no authority to act without bringing them to the attention of the Executive Committee - which he failed to do.
"In doing so the Minister breached the Ministerial Code and had no legal authority to take a decision."
A Health Department spokesperson said the Minister "is aware of the judgement document and will read and consider it".
Reacting to the ruling, John O'Doherty from the Rainbow Project said that Mr Poot's decision to keep the ban in place had outraged many in Northern Ireland.
"This ruling is a shocking indictment of the conduct of Minister Poots, who has proven himself incapable of separating his personal prejudices from his public responsibilities," he said.
"This case, coupled with the adoption case, show that Minister Poots has continually wasted public money defending the indefensible and has absolutely nothing to show for it."
Mr O'Doherty added that the organisation he represents was now looking forward to the overturning of this unreasonable ban, "ending this farce once and for all".