Greste's defense lawyer Amr Al-Deeb told the press: "The Court of Cassation has accepted their appeal and ordered a retrial," the AFP news service reported, cited by BNS.
The Qatar-based Al Jazeera Network called for a speedy release of the jailed journalists, saying that Egypt would only damage its own reputation by extending their imprisonment.
However, early indications were that the trio would remain locked up pending their appeal.
"The Egyptian authorities have a simple choice – free these men quickly, or continue to string this out, all the while continuing this injustice and harming the image of their own country in the eyes of the world. They should choose the former," an unnamed Al Jazeera spokesman said.
A statement released by the Latvian Foreign Ministry said: "It is a good thing that the unjust verdict has been set aside. However it is truly unfortunate and unacceptable that the journalists remain in custody. We hope that the case will be sent for retrial as soon as possible and that a correct verdict will be reached.
Latvia and Australia, together with the European Union will continue to actively cooperate in order to see justice done."
The date of the retrial is not yet known.
Greste, a reporter for the Al Jazeera Network and a citizen of both Latvia and Australia, was detained in Cairo on December 29, 2013. He was accused of "spreading false news" and supporting the Muslim Brotherhood, a political organization blacklisted in Egypt after military strongman General Sisi overthrew the democratically-elected government of Mohamed Morsi.
On June 23, 2014, an Egyptian Court sentenced Greste to seven years in prison at the end of a trial widely derided as a travesty of justice.
Greste's Al Jazeera colleagues and co-defendants Mohamed Fahmy and Baher Mohamed were also given lengthy sentences.