A Canadian oil company can be sued for genocide in the US over allegations it cooperated with the Sudanese government in military actions against civilians near its oil fields.
Talisman has promised to return when there is peace
US District Judge Allen G Schwartz dismissed Talisman Energy's objections that the case was outside US jurisdiction.
Talisman has not commented on the ruling.
Human rights groups have campaigned for years against Talisman, claiming oil revenues paid to the government have been used to buy arms to fight the two-decade-long civil war.
Talisman entered Sudan in 1998 but sold all of its 25% stake in Sudan's Greater Nile Oil Project to an Indian state-owned oil company earlier this month.
Human rights claims
The suit filed by the Presbyterian Church of Sudan in 2001 claims Talisman aided the Sudanese military in a "brutal ethnic cleansing campaign".
The church claims there have been gross human rights abuses and that its churches have been bombed, parishioners killed, enslaved, raped and forced to flee by the government's actions.
It calls the Sudanese government an "Islamic fundamentalist movement" set on eliminating Christians and other religions.
About 2 million people are thought to have died in the conflict.
Judge Schwartz threw out Talisman's claims that the case could hinder US efforts to broker peace in Sudan.
"Any criticism of Sudan that would arise as a result of
the adjudication of this case would be a mere drop in the
bucket," Judge Schwartz wrote.
He referred to the Sudan Peace Act, which describes the actions of the Sudanese government as constituting genocide, and a US declaration that the Sudan is a sponsor of terrorism.
Talisman has operations in Canada, the US, the North Sea, Indonesia, Algeria, Trinidad and Colombia.
The Greater Nile Oil Project is a joint venture between the Sudanese state oil company Sudapet, India's ONGC Videsh, Malaysia's state oil firm Petronas, and the China National Petroleum Corporation.