Mr Musk, who is in the process of buying the social media network, said the decision to block Trump in January 2021 was “morally bad” and “a mistake”.
“I think it was a morally bad decision, to be clear, and foolish in the extreme,” he said at a Future of the Car event hosted in London by the Financial Times.
He added: “I do think it was not correct to ban Donald Trump. I think that was a mistake – it alienated a large part of the country and did not ultimately result in Donald Trump not having a voice.”
He said the decision to ban Mr Trump from Twitter, taken after the 6 January riot at the US Capitol, did not silence the former president’s voice entirely. Rather it amplified his views among people on the political right, Mr Musk said.
Mr Musk, 50, the CEO of Tesla, is in the process of buying Twitter for $44bn (£36bn). He has said he wants to promote free speech on the platform.