The ruling could prove vital to Brazil's political future.
Despite being convicted of corruption and money-laundering in July 2017, Lula is hoping to win another term as president at elections this October.
He firmly denies the allegations against him, which he says are designed to stop him running for office again.
So it's a choice of prison or the presidency?
Lula has been sentenced to nine-and-a-half years' imprisonment, but if the judges don't overturn that he won't be sent straight to jail.
He has remained free while the most recent appeal was heard, and could still appeal to higher courts.
If the sentence is upheld it would likely put paid to his re-election ambitions, though - angering his many supporters.
What's happening on the streets?
Thousands of Lula's supporters have been rallying in the southern city of Porto Alegre, where the appeal has been heard.
Addressing the crowd on Tuesday, the Workers' Party figurehead said only death would stop him persevering.
"Only one thing will take me off the streets of this country, and it will be the day of my death," he declared.
Image copyrightREUTERSImage captionCrowds show their support for Lula at a rally in Porto Alegre
"Until that moment, I will fight for a more just society. Whatever the outcome of the trial, I will continue fighting for the dignity of the people of this country."
Anti-Lula demonstrators took part in a rival march in Porto Alegre, demanding an end to corruption.