Judge Collin Lamont ruled that Mr Malema's signature song, Shoot the Boer, incited hatred.
The song, popularised during the anti-apartheid struggle, refers to Afrikaners and farmers.
Mr Malema said he would push for reform to the court system, which he said had not changed since the apartheid era.
"If not being transformed means it's racist, then so be it," said Mr Malema, youth leader of the African National Congress (ANC).
"Once again we find ourselves subjected to white minority approval. Apartheid is being brought through the back door."
'Witch-hunt'He said he wanted liberation songs to be protected by law.
"These were the songs of resistance and they will never die," he said.
A group that campaigns mainly for Afrikaner rights, AfriForum, took legal action to ban Mr Malema from singing Shoot the Boer.
On Monday, Judge Lamont said that in post-apartheid South Africa, all citizens are called to treat each other equally and urged the ANC to find new customs which did not bring disunity.
Julius Malema is popular among South Africa's youthThe ANC said it would appeal against the ruling.
The court's verdict is likely to increase Mr Malema's popularity among black South Africans, making it more difficult for the ANC to discipline him, analysts say.
He is presently appearing before an ANC inquiry on charges of bringing the party into disrepute.
It follows Mr Malema's call for regime change in neighbouring Botswana.
He accused the government in Gaborone of being a "puppet" of Western powers.
Mr Malema says the inquiry shows he is the victim of a political witch-hunt because of his opposition to President Jacob Zuma.
He helped propel Mr Zuma to power in 1999, but now appears to have fallen out with him.
The ANC is due to choose its leadership next year, with its president likely to become South Africa's leader after the 2014 elections.
Mr Malema wants South Africa to nationalise its rich mines and seize white-owned land.
He has praised President Robert Mugabe's land reform in neighbouring Zimbabwe.
He is also being investigated by state prosecutors on allegations of fraud and corruption, which he denies.
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