In a two-to-one split decision, the British Columbia Court of Appeal overruled a lower court's quashing of a part of the Criminal Code, saying it was bound by a high court ruling 20 years ago against doctor-assisted suicide.
"The societal consequences of permitting physician-assisted suicide in Canada... are a matter of serious concern to many Canadians," Justices Mary Newbury and Mary Saunders said in the ruling.
"No consensus on the subject is apparent, even among ethicists or medical practitioners."
ALS patient Gloria Taylor, who brought the British Columbia legal action with help from a civil liberties group, has since died from her degenerative neurological illness, more commonly known as Lou Gehrig's disease.
The ruling comes after a lower court struck down the ban last year, calling it discriminatory, disproportionate and overbroad.
The federal government appealed that ruling, arguing that the ban protected society's most vulnerable.
Not everyone agrees.
A Canadian microbiologist who reassured a frightened nation during the 2003 SARS crisis reignited debate over the controversial issue last month with a posthumous plea for assisted suicide.
In a video recorded eight days before his death last month, Donald Low called for Canada's laws to be changed so that he and other terminal patients could choose the time and manner of their death.
"I'm just frustrated not being able to have control over my own life, not being able to make the decision for myself when enough is enough," he said.
"Why make people suffer for no reason when there's an alternative. I just don't understand."
In 1993, the Supreme Court rejected terminally ill patient Sue Rodriguez's legal challenge of the ban on physician-assisted suicide.
Canadian Justice Minister Peter MacKay's office says the government has no plans to reconsider the issue, noting that a majority of parliamentarians voted in 2010 to maintain the status quo.
"The laws surrounding euthanasia and assisted suicide exist to protect all Canadians, including those who are most vulnerable, such as people who are sick or elderly or people with disabilities," said MacKay's spokeswoman Paloma Aguilar.
The government has "no intention of reopening this debate," she added.
The topic recently also came up at a roundtable of health ministers from across Canada, after Quebec province unveiled a proposed law to allow euthanasia in rare instances.
"This is just the beginning of a really important conversation and we are nowhere close to the end of that conversation," Ontario Health Minister Deb Matthews said last week.