The European Court of Justice (ECJ) ruled that "less onerous" options should be considered first, to protect against diseases such as HIV.
A French court will now decide if the outright ban is proportionate.
France has the highest rate of HIV among sexually active gay men in Europe, according to the court.
The ruling was made in response to a case brought by Frenchman Geoffrey Leger in 2009, after a doctor refused to allow him to give blood.
The ECJ ruled on Wednesday that a blanket ban in France "may be justified" but only under certain strict circumstances.
'Unacceptable'
The French court that will make the final decision on the case must first decide whether there is a high risk of gay men in France catching severe diseases that can be transmitted by blood.
The court highlighted data on Wednesday that showed that France had the highest rate of HIV infections among gay men in Europe and Central Asia.
But the court said that even if high risk was established, an outright ban may still not be justifiable
French Health Minister Marisol Touraine supports removing references to sexual orientation from donor forms
The ECJ says that before the French court can make its decision, it must check whether there are "effective techniques" to detect HIV that could be used instead of a ban.
"The Strasbourg administrative tribunal will have to ascertain whether there are less onerous methods of ensuring a high level of health protection for recipients other than permanent deferral from blood donation," it said in a statement.
If there are no reliable methods of detecting HIV, then a ban will only be valid if there are no other ways of identifying high risk sexual behaviour such as questionnaires or interviews with a nurse or doctor.
The ruling comes at a time when many countries in Europe are considering whether or not to ease restrictions on blood donations from gay men:
- French Health Minister Marisol Touraine has said discrimination against potential blood donors on the basis of sexual orientation is unacceptable
- Germany is assessing its current guidance which prohibits donations from anyone with a "significantly increased risk of transmission" of diseases through their blood
- England, Wales and Scotland in 2011 allowed donations from men who had not had sex with other men for more than 12 months
- Northern Ireland maintained the ban but will examine the ECJ's ruling
- The US is recommending that a lifetime ban be replaced by restrictions similar to England, Scotland and Wales
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