In its decision, the court, headed by retired New Zealand judge Sir Maurice Casey, ruled that Fiji's multiracial 1997 constitution remained valid and had not been repealed by the military after the coup.
It ordered Parliament to be recalled and President Ratu Josefa Iloilo to step down by March 15.
Mr Prasad, aged 66, mounted his legal challenge after he was made homeless by racial terrorism directed at Indians in the days and weeks following the coup.
Homes were looted and destroyed and ethnic Indians beaten or harassed. Although Mr Prasad's fate was shared by many Indians, his court challenge and the historic outcome mean his self-proclaimed "ordinary life" will never be the same.
Mr Prasad has lived all his life on the family's farm at Muaniweni on the southern side of Fiji's main island, Viti Levu.
His father farmed it and his grandfather - who came out from India - before him. He spent two years at school before his mother died and his father struggled to keep the family of seven children together with the help of his eldest daughter.
Although his siblings left the farm, Mr Prasad chose to stay. He married a woman from his neighbourhood and they had three sons.
His days were straightforward: he rose early to milk the cows, stopping at 7.30 when his wife would bring him tea. Then he would work until 11 and have some lunch before doing more farm work.
His closest neighbour was his nephew Hari Diwakar Prasad, and the pair would sometimes go together to local functions.
Mr Prasad speaks Fijian as fluently as he does Hindi.
"We used to go to all the wedding and funeral gatherings in the Fijian village and they came to ours," Mr Diwakar Prasad told the Fiji Times.
"When they needed help, we helped. Sometimes they worked for us."
But in May, when Mahendra Chaudhry, the country's first ethnic Indian Prime Minister, was taken hostage by Speight and held along with his ministers in the Suva Parliament, everything changed.
Livestock and crops were stolen, houses looted, there were beatings and Mr Diwakar Prasad's 7-year-old child was thrown across a room. The families became refugees.
Yesterday, the fate of Fiji's 800,000 people, 44 per cent of whom are Indian, rested in the hands of Ratu Iloilo, who has said he will consult the Great Council of Chiefs next Thursday. He will then announce the way forward "in accordance with the law."
International pressure is firmly behind a return to democracy, with the United States, Britain, Australia and New Zealand all urging Fiji's interim Government to quickly implement the court's ruling.
Commonwealth Secretary-General Don McKinnon said the court's decision "sends a clear message that the rule of law cannot be overturned by force."
Mr Chaudhry told ABC radio in Australia that his return as Prime Minister was not certain. He said: "It's a matter for discussion."
Transcripts: Fiji Court of Appeal judgment
Audio
(9 minutes, Courtesy FM96)
Herald Online feature: the Fiji coup
Full text: Fiji High Court rules in favour of Chaudhry
Fiji President names new Government
Main players in the Fiji coup
The hostages
Fiji facts and figures
Images of the coup - a daily record
