Sikh woman Kamaljit Kaur Athwal won the landmark legal fight to overturn the ban, claiming it discriminated against carrying her religion's ceremonial sword, the Kirpan.
Initiated Sikhs must wear the Kirpan, typically sheathed and concealed beneath clothing, under the requirements of their faith.
Queensland law prohibited religious members from carrying the blade on school grounds as unreasonable to "physically possess a knife in a school for genuine religious purposes".
The Court of Appeal this week found the legislation was "inconsistent with the Racial Discrimination Act".
"Carrying a kirpan as a symbol of a religious commitment would, at least ordinarily, constitute a use of the knife for a lawful purpose - namely, religious observance," the court found.
"To say that both Sikhs and non-Sikhs cannot practice their religion while wearing a knife ignores the fact that carrying a knife is only a feature of the religious observance of Sikhs.
"A law which prohibits a person from carrying a knife in a school for religious purposes impacts on Sikhs by preventing them from lawfully entering schools while adhering to their religious beliefs.
"No other group finds their freedom of religion or freedom of movement limited in that way."
The ruling sent ripples through the halls of state government, with Education Minister Grace Grace asked if parents should be "rightly concerned" in Estimates Hearings on Thursday.
Ms Grace admitted the department had not been prepared for the court's decision and the government as a whole was considering long-term ramifications of the ruling.
"We haven't had a chance to analyse the decision to see exactly if there a way that we can fix this,"she said.
"But obviously, we want to have a look at the full gamut of that, and I want to work with the various ministers.
"I understand that the prohibition of knives in schools comes under the weapons act, so how that may or may not be modified, we don't know at this stage.
"We don't know the intricacies. We may need to get some advice as to whether or not we can stay the decision."
Asked if the Palaszczuk government would appeal the court decision, Ms Grace said it was under consideration.
"We need to look at it in a balanced and proper way, and we need to determine the way forward.
"We haven't had an opportunity to do that. I assure Queenslanders and the school communities that we will take a very close look at that decision. "
Education Department director-general Michael De'Ath said it was still under review.
"I have only just been made aware of this finding, and the department is considering how it will respond."
Police Minister Mark Ryan was also questioned over the court's decision.
"We'll have a look at it," he told reporters.
"The conversation, I think, needs to be with the Commonwealth government. So obviously, when I next see the Commonwealth attorney-general, I'll mention Queensland's position and our good work around trying to reduce knife crime and the efforts that we've done to do that."
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