Friday's ruling by U.S. District Judge Murray Snow in Phoenix against the Maricopa County sheriff is the result of a five-year legal challenge. It marks the first finding by a court that the agency racially profiles people.
"It's a big victory for everyone who's suffered through the terror Sheriff Joe Arpaio has caused," said Arizona lawmaker Steve Gallardo.
At trial last summer, several Hispanic U.S. citizens told the judge they were wrongfully detained, pulled over by Arpaio's deputies because of the color of their skin.
Arpaio's attorney said race had nothing to do with it, but the judge found otherwise, ordering the two sides to come together in court in June to discuss the plaintiffs' demands for reform and new training.
The sheriff, who has repeatedly denied the allegations, won't face jail time as a result of Friday's ruling. Monetary damages weren't sought in the lawsuit but rather a declaration that Arpaio's office engages in racial profiling and an order that requires it to make policy changes.
The Associated Press contributed to this report.