In a statement released on Tuesday, Judge Souza Prudente said that work could only resume on the $11bn, 11,000MW Belo Monte Dam after the indigenous communities living in the area were consulted.
The dam has been condemned by environmentalists and rights activists, who say that it would devastate wildlife and the livelihoods of 40,000 people who live in the area that would be flooded.
The government, however, says the dam will be a source of clean, sustainable energy, and that it will help fuel the country's economy.
The dam would be the world's third largest when completed on the Xingu River that feeds the Amazon.
The court noted that when congress approved the project in 2005, it called for an environmental impact study after the start of the work.