The ruling does not bar the team from using the Redskins name if it wishes. The team could even still sue for trademark infringement, but winning such a case could prove more complex without the legal protections that come with a federally registered trademark.
Redskins President Bruce Allen said the team will appeal.
"We are convinced that we will win because the facts and the law are on the side of our franchise that has proudly used the name Redskins for more than 80 years," Allen said in a statement.
The team's lawyer, Robert Raskopf, said the team's trademarks remain intact during the appeal process and that the Redskins "will continue to use their longstanding marks."
U.S. District Judge Gerald Bruce Lee's ruling upholds an earlier finding by an administrative appeal board and orders the federal Patent and Trademark Office to cancel the registration. A group of Native American activists first challenged the trademark registration in 1992, and various administrative boards have ruled against the team before. But Wednesday's order is the first time that a federal judge ruled against the team and found that the name may be disparaging.
The team had sued in federal court in Alexandria seeking to overturn a ruling last year by the Trademark Trial and Appeal Board. It argued that the name honours Native Americans and that cancelling the trademark infringes on its free-speech rights because it requires the government to judge whether the name is offensive.
In rejecting the team's free-speech argument, Lee's 70-page ruling cited a U.S. Supreme Court decision last month allowing the state of Texas to bar depiction of the Confederate battle flag on specialty license plates sought by the Sons of Confederate Veterans.
Just as Texas could not be forced to issue license plates depicting a flag considered offensive, Lee said, the Patent and Trademark Office cannot be forced to register a trademark that is deemed disparaging.
Lee said the team's free speech rights are unaffected because the team can still use the name.
Joel Barkin, spokesman for the Change the Mascot campaign, also made a comparison to the Confederate flag in reacting to the ruling. He noted how quickly the culture has shifted views in rejecting the Confederate flag and in accepting same-sex marriage, and said the team and the National Football League will find themselves on the wrong side of history if they continue to defend the name.
Team owner "Dan Snyder and the NFL have to face the fact that we have a changing country," Barkin said. "How long do they want to fight that?"
Amanda Blackhorse, one of the Native Americans who filed the most recent challenge to the team's name, said in a statement that she is pleased with the ruling.
"I have asked this many times before and have never heard a sensible answer — if people wouldn't dare call a Native American a 'redskin' because they know it is offensive, how can an NFL football team have this name?" she said in a statement.
Jeff Lopez, lawyer for the Native Americans who challenged the team's name, said that Lee's ruling was an across-the-board victory for his clients and that he is confident it will be upheld on appeal.
Lee said the legal standard for cancelling the registration is whether the name "may disparage" a substantial composite of the Native American community. Though the team has maintained that the name honours Native Americans — citing evidence that Native American high schools have adopted Redskins as a team name — Lee said there is ample evidence that the name may be perceived as disparaging. He cited the fact that Native American leaders have been objecting to the name for decades, along with dictionary citations that the word is typically considered offensive.