Philips ruled in September that the policy is unconstitutional. The federal government is appealing her ruling, even as President Obama attempts to repeal the policy legislatively. Arguments are set to begin in January.
In today's decision, the judges said the military's argument, that abruptly ending the policy would cause irreparable harm, is "convincing."
The decision was made by a three-judge panel. One judge dissented, writing that he would have barred the military from actually discharging servicemembers pending appeal.
Late update: A lawyer for the Log Cabin Republicans, which brought the case against DADT, says the ruling is a "disappointment." He also said the group is still deciding whether to ask the Supreme Court for a review of the stay.