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It was unclear which way the three judges of the San Francisco-based 9th Circuit Court of Appeals would rule, though legal experts said the states appeared to have the edge.
"I'm not sure if either side presented a compelling case, but I certainly thought the government's case came across as weaker," said Stephen Vladeck, a professor at the University of Texas School of Law.
A ruling could come as early as Wednesday and could be appealed to the U.S. Supreme Court.
Trump tweeted early Wednesday: "If the U.S. does not win this case as it so obviously should, we can never have the security and safety to which we are entitled. Politics!"
The appeals court challenged the administration's claim that the ban was motivated by terrorism fears, but it also questioned the argument of an attorney challenging the executive order on grounds that it unconstitutionally targeted Muslims.
The contentious hearing before three judges on the San Francisco-based 9th Circuit Court of Appeals focused narrowly on whether a restraining order issued by a lower court should remain in effect while a challenge to the ban proceeds. But the judges jumped into the larger constitutional questions surrounding Trump's order, which temporarily suspended the nation's refugee program and immigration from seven mostly Muslim countries that have raised terrorism concerns.
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