US District Judge Robert Wilkins said the American government can proceed with the case that alleges Armstrong defrauded the government by accepting sponsorship money from the US Postal Service while using performance-enhancing drugs.
"The court denies without prejudice the defendants' motion to dismiss the government's action as time-barred," Wilkins wrote in his opinion.
Armstrong was stripped of his seven Tour de France titles for doping and handed a life ban from the sport, eventually admitting last year, after more than 10 years of denials, that all seven triumphs were fueled by banned drugs.
Armstrong finally admitted to doping during a television interview broadcast in January 2013 with American talk show host Oprah Winfrey.
The case was originally brought against Armstrong by former teammate and fellow American Floyd Landis. The Justice Department chose to intervene and filed its own case against Armstrong.
The government said the US Postal Service was duped into paying Armstrong and his teammates $40 million from 1998 to 2004.
In February of last year, the US government filed the suit against Armstrong demanding $100 million in damages on behalf of Armstrong's then major sponsor the US Postal Service.
Armstrong argued in November that the courts should dismiss the government's case against him, saying they waited more than 10 years to file suit.