Gen Rios Montt will face charges of crimes against humanity in connection with the killing of 1,771 indigenous Mayans during his rule in 1982-1983.
Prosecutors said he wanted to wipe out the indigenous group, which he suspected of supporting rebel fighters.
Gen Rios Montt, 86, is the first ex-president to be charged with genocide by a Latin American court.
The ruling clears the way for a three-judge to try the former president and another former military man, Jose Mauricio Rodriguez.
Gen Rios Montt had enjoyed immunity from prosecution for 12 years while he was serving as a congressman.
The immunity was lifted on 14 January 2012, when his term ran out. He has been under house arrest since.
Judge Miguel Angel Galvez said there was enough evidence linking the general to the killing of members of the Ixil Maya group to warrant the trial.
Gen Rios Montt will also face charges over the forced displacement of 29,000 indigenous Guatemalans as part of what human rights groups have called his “scorched earth” policy.
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