A committee of Mexico's Congress has given the go-ahead for lawmakers to vote on stripping left-wing Mexico City's mayor of his legal immunity.
Mr Lopez Obrador has been compared to Venezuela's president
Observers say the move could put Andres Manuel Lopez Obrador out of the running for next year's presidential elections.
Correspondents say he is currently widely seen as the frontrunner.
A lawmaker from the mayor's party, Horacio Duarte, called the committee's decision a coup against the people of Mexico City.
Mr Lopez Obrador himself urged peaceful street demonstrations in protest against the vote in a central city square, Reuters news agency reported.
"That day will mark the beginning of a new era of fighting for respect of the popular will and civil rights ... of all Mexicans," he was quoted as saying.
The commission decided by three votes to one that there was enough evidence to allow legal proceedings against the mayor.
If Mr Lopez Obrador loses the vote he will face criminal charges that he allowed the building of an entrance road to a city hospital to continue, in defiance of a court order.
Legal proceedings against him would prevent him from standing in presidential elections, scheduled for July next year.
The BBC's Claire Marshall in Mexico City says this is the most controversial political issue in Mexico at the moment.
But since these proceedings against the mayor began his popularity has soared by as much as 10 percentage points, according to one polling organisation.
Mr Lopez Obrador is from a left-wing political party.
He had been called a populist and been compared to the Venezuelan President Hugo Chavez.
He has the ability to draw thousands of people onto the streets to demonstrate in his favour.