Call for elections
The verdict calls on Ratu Josefa Iloilo, the country's president, to appoint a caretaker prime minister to oversee elections.
A three-judge panel said the military chief's government had come to power
illegally and said elections would "enable Fiji to get a fresh start".
The decision overturned a high court ruling last October that Iloilo acted legally when he authorised a transition of power to Bainimarama in 2006, in an effort to prevent further instability following the country's fourth coup in 20 years
After the coup, brought about following months of arguments with Qarase whom Bainimarama accused of discriminating in favour of indigenous Fijians who were his power base, Bainimarama convinced Iloilo to formally install his government, a move he argues made his government legitimate.
The military chief has long promised to call elections to restore democracy, but defied international pressure and sanctions to do so quickly.
He had faced a May 1 deadline to name an election date or face automatic suspension from the Pacific Islands Forum, a regional trade and diplomatic bloc.
Hillary Clinton, the US secretary of state said on Tuesday: "We share a common determination that democracy must not be extinguished there."
Fiji's tourism and sugar-dependent economy has plunged since the coup,
sending more of the nation's 800,000 people into poverty.