The decision on Monday was the court's final ruling.
Lawyers had earlier argued that the government was not entitled to prosecute Sheikh Hasina, the leader of the Awami League party, under emergency rules currently in force in the country.
Meanwhile, on the same day, a court had sentenced Nazmul Huda, a former minister, to seven years in jail for taking a bribe of $350,000 from a construction firm, court officials have said.
Huda had served as communications minister in the government of Begum Khaleda Zia, the most recent prime minister.
The court also ordered Sigma Huda, Huda's wife, to serve three years in jail for abetting her husband in accepting the bribe.
Sheikh Hasina, who is being held at a house inside the parliament complex, is among 150 high-profile figures who have been arrested as part of an anti-corruption campaign.
She has denied all charges against her and told a court that they were aimed at forcing her out of politics.
The government has rejected the claim.
Bangladesh has been under emergency rule since January 11 when elections were cancelled after months of violence over allegations of vote-rigging made by the Awami League party against the Bangladesh Nationalist Party (BNP).
The BNP-led government of Khaleda Zia, the country's last elected prime mnister, held power until last October.