Obama had used an executive order to bypass a hostile Congress and drive through measures to protect about four million undocumented foreigners from deportation.
But a judge in Texas issued an emergency injunction before the measures were to come into effect starting on Wednesday.
Obama was defiant: "I think that the law is on our side and history is on our side, we are going to appeal it."
"This is not the first time a lower court judge has blocked something or attempted to block something that ultimately was shown to be lawful."
Twenty-six states -- all but two Republican-governed – had pressed the Texas judge to intervene, claiming Obama had acted unlawfully.
Federal judge Andrew Hanen of the US District Court in Brownsville, Texas agreed.
"It is far preferable to have the legality of these actions determined before the fates of over four million individuals are decided," he ruled on Monday.
Immigration is a hot political issue heading towards the 2016 Presidential election, around 11 million undocumented migrants in the country.
Obama's executive order would have allowed only some of them to come forward: those who have not committed serious crimes and have children who are American citizens or residents.
Obama has also tried to push more comprehensive immigration reform, which could eventually bring many millions of new voters, many seen as likely Democrats.
"This is something that we necessarily have to make choices about," Obama said again pressing Congress to act on Tuesday.
"We have 11 million people here who we're not all going to deport," the President added.

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