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The tribunal's appeals chamber said former government official and propagandist Jean-Bosco Barayagwiza will now stand trial on charges of genocide and crimes against humanity.
 Prosecutor Carla del Ponte argued the trial should go ahead
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It said prosecutors from the tribunal - based in Arusha in Tanzania - had taken too long to prepare their case against Mr Barayagwiza.
This had resulted in a long period of detention without trial which the appeals chamber said violated Mr Barayagwiza's rights.
The decision to release him prompted a furious reaction from the Rwandan Government, which suspended co-operation with the tribunal in response.
Review
Since then, the UN's chief war crimes prosecutor Carla del Ponte, eager to mend relations with Kigali, has led efforts to have the case reviewed.
Ms Del Ponte, who was appointed chief prosecutor just after the appeals chamber ordered Mr Barayagwiza's release in November, welcomed Friday's decision to overturn the order.
Mr Barayagwiza remained in custody in Arusha pending the review.
Ms del Ponte argued before the appeals court judges that allowing Mr Barayagwiza to go free would amount to a serious violation of the rights of the victims of the genocide.
Lawyers acting for Mr Barayagwiza argued that the release order should be upheld, since prosecutors had not presented any fresh evidence at the latest hearing.
Mr Barayagwiza was the director of a notorious radio station which broadcast messages in 1994 encouraging Hutu militias to kill Tutsis and moderate Hutus, whom the station described as "cockroaches".
About 800,000 people were murdered in the genocide.
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