Mubarak, 84, his two sons Alaa and Gamal, his former interior minister Habib al-Adly and top security chiefs will now face a new trial, the Court of Cassation, the top appeals court, said after a brief hearing.
The ruling was met with cries of "Long live justice!" by Mubarak supporters who held up the former strongman's picture and hugged each other in the courtroom, with dozens more outside shouting "We love you, president!"
Mubarak, his sons and Adly will remain in jail, however, as they still face separate cases.
Judge Ahmed Ali Abdelrahman told the court he had accepted the appeals by Mubarak, Adly and the prosecution, thereby cancelling all previous rulings by the Cairo criminal court.
A date has still to be set for the new trial, judicial sources said.
The decision comes less than two weeks before the second anniversary of the popular uprising that unseated Mubarak and paved the way for the election of the country's first Islamist president, Mohamed Morsi.
On June 2, Mubarak and Adly were sentenced to life in prison for failing to prevent the deaths of over 800 protesters during the 18-day uprising that began on January 25, 2011.
Six security chiefs on trial in the same case were acquitted at the time.
Mubarak and his two sons, Gamal and Alaa - once the symbols of power and wealth in the country - were acquitted on corruption charges due to the expiry of a statute of limitations.
The rulings sparked nationwide outrage, with thousands taking to the streets to vent their anger that no one had been found directly guilty of killing the protesters.
On Saturday, an ailing Mubarak was interrogated over fresh charges of corruption and ordered detained for 15 days pending investigation.
He is accused of accepting gifts worth seven million Egyptian pounds (around $1 million) from the country's flagship state newspaper Al-Ahram.
Following sentencing in June last year, Mubarak was moved to Tora prison in south Cairo after spending 16 months in hospitals in the Red Sea resort of Sharm el-Sheikh and then in Cairo.
His health collapsed and the state news agency even reported him clinically dead at one point as he slipped into a coma.
He has since suffered several health scares and is currently being treated for fractured ribs and fluid in the lungs at a military hospital in Cairo.
Until anti-government protests erupted on January 25, 2011 Mubarak had seemed untouchable as president of the most populous nation in the Arab world, backed by the United States and the military, from whose ranks he had emerged.