The state filed a lawsuit against Trump’s administration on Wednesday in an embarrassing body blow to the president, who redrew the ban in the wake of intense criticism and a legal order last month.
Hawaii had previously sued over the initial ban, but that lawsuit was put on hold while other cases played out across the country.
The revised executive order, which goes into effect on the 16 March, bars new visas for people from six predominantly Muslim countries and temporarily shuts down the US refugee program.
It won’t apply to travellers who already have visas.
“Hawaii is special in that it has always been non-discriminatory in both its history and constitution,” Attorney General Douglas Chin said. “Twenty percent of the people are foreign-born, 100,000 are non-citizens and 20 percent of the labour force is foreign-born.”
Chin, who noted the state has budgeted about $150,000 (£123,000) for a law firm to help with the case, said people in Hawaii find the idea of a travel ban based on nationality distasteful.
He said they remember when Japanese Americans were sent to internment camps on the islands during World War II.
People in Hawaii know that the fear of newcomers can lead to bad policy, Chin said.
The move came after a federal judge in Honolulu said earlier Wednesday that Hawaii can move forward with the lawsuit.
US District Judge Derrick Watson granted the state’s request to continue with the case and set a hearing for 15 March - the day before Trump’s order is due to go into effect.
The US Department of Justice declined to comment on the pending litigation.
The state will argue at the March 15 hearing that the judge should impose a temporary restraining order preventing the ban from taking effect until the lawsuit has been resolved.
Hawaii’s complaint says it is suing to protect its residents, businesses and schools, as well as its “sovereignty against illegal actions of President Donald J. Trump and the federal government.”
The order affects people from Iran, Syria, Somalia, Sudan, Yemen and Libya.
Imam Ismail Elshikh of the Muslim Association of Hawaii, a plaintiff in the state’s challenge, says the ban will keep his Syrian mother-in-law from visiting.
Trump’s “executive order inflicts a grave injury on Muslims in Hawaii, including Dr. Elshikh, his family, and members of his mosque,” Hawaii’s complaint says.
A federal judge in Seattle issued a temporary restraining order halting the initial ban after Washington state and Minnesota sued. The 9th US Circuit Court of Appeals refused to reinstate the order.
While Hawaii is the first to sue to stop the revised ban, the restraining order is still in place and could apply to the new one, too, said Peter Lavalee, a spokesman for the Washington attorney general’s office.
University of Richmond Law School professor Carl Tobias said Hawaii’s complaint seemed in many ways similar to Washington’s successful lawsuit, but whether it would prompt a similar result was tough to say.
He said he expects the judge, an appointee of President Barack Obama who was a longtime prosecutor, to be receptive to “at least some of it,” the Associated Press reported.
Given that the new executive order spells out more of a national security rationale than the old one and allows for some travelers from the six nations to be admitted on a case-by-case basis, it will be harder to show that the new order is intended to discriminate against Muslims, Tobias said.
“The administration’s cleaned it up, but whether they have cleaned it up enough I don’t know,” he said. “It may be harder to convince a judge there’s religious animus here.”
Tobias also said it is good that Hawaii’s lawsuit includes an individual plaintiff, considering that some legal scholars have questioned whether the states themselves have standing to challenge the ban.