The appeal court has reversed President Morsi's decision to dismiss former prosecutor-general Abdel-Meguid Mahmoud from his post.
Mahmoud was dismissed by President Morsi's constitutional declaration in November 2012 and Talaat Abdullah was appointed to replace him.
Under Egyptian law, the prosecutor-general can only be dismissed by judicial decree, not by the president.
The removal of the prosecutor-general sparked uproar among the Egyptian opposition and the judiciary.
Critics said the constitutional declaration had granted the president both executive and legislative powers.
Many opposition groups are demanding the dismissal of the current prosecutor-general, Talaat Abdullah.