At issue is the "cost sharing" provision in the law that requires insurance companies offering health plans through the law to reduce out-of-pocket costs for policy holders who qualify. The government offsets the added costs to insurance companies by reimbursing them.
But lawyers for the House argued that Congress did not properly approve the money for those reimbursements.
U.S. District Judge Rosemary Collyer, who was appointed to the bench by President George W. Bush, sided with the challengers but said that she would stay her ruling pending appeal.
"Congress is the only source for such an appropriation, and no public money can be spent without one," she wrote.
The Obama administration is expected to appeal the decision.
Jonathan Turley, a lawyer for the House, said the ruling shows that the President's signature health care law "violated the Constitution in committing billions of dollars from the United States Treasury without the approval of Congress."
"Judge Collyer's opinion is a resounding victory not just for Congress but for our constitutional system as a whole," Turley said in a statement. "We remain a system based on the principle of the separation of powers and the guarantee that no branch or person can govern alone. It is the very touchstone of the American constitutional system and today that principle was reaffirmed in this historic decision."
White House press secretary Josh Earnest on Thursday characterized Republicans' efforts as unprecedented, and predicted the administration would prevail.
"This suit represents the first time in our nation's history that Congress has been permitted to sue executive branch over a disagreement about how to interpret a statute," Earnest said during his daily briefing. "These are the kinds of political disputes that characterize a democracy. It's unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to re-fight a political fight they keep losing."
An announcement on appealing Thursday's decision would come from the Justice Department once the ruling is fully assessed, Earnest said.
Former House Speaker John Boehner, who led the effort on the suit, called the decision "a victory."
"Today's Obamacare decision is a victory for the American people, and for House Republicans, who have stood firm for the rule of law," he tweeted
"This case is far from over," said Timothy Jost, a supporter of the law at the Washington and Lee University School of Law.
He said that last fall the judge was wrong to rule that the House had the standing to bring the case in the first place and that he expects the appeals court to reverse on that threshold issue.
"Ultimately, if her opinion holds, and it is unlikely that it would, it would mean that insurers will have to come up with a way of providing the cost sharing reductions, and that would probably mean increased premiums down the road," he said.