The 5th U.S. Circuit of Appeals panel issued the ruling Thursday.
In January, a federal judge in Mississippi denied an Opulent Life Church's request to stop the city from enforcing part of its zoning ordinance. The church appealed.
The church and its supporters, including the Texas-based Liberty Institute, claimed several restrictions in the ordinance are unconstitutional because they are unequally applied to churches.
The city contended the church had other avenues available, such as asking for a variance from the ordinance, before filing suit. Until those avenues are exhausted, the city contends the issue should not be before the courts.