Germany's Supreme Court has ruled that a general election planned for 18 September can go ahead.
Mr Schroeder wants a new mandate for controversial welfare reforms
The court rejected a complaint by two MPs who argued that constitutional procedures had been violated. The judges voted 7-1 for the election.
German Chancellor Gerhard Schroeder engineered the election by deliberately losing a vote of confidence in July.
Campaigning is already in full swing, with polls suggesting Mr Schroeder's Social Democrats (SPD) will lose.
The opposition conservative Christian Democrats (CDU), led by Angela Merkel, are widely tipped to win the election, which is taking place a year earlier than scheduled.
All of Germany's main parties wanted the elections to be brought forward by a year.
The judges' ruling has an earlier precedent. The Supreme Court ruled in favour of Chancellor Helmut Kohl when he organised a confidence vote defeat for himself in 1982, to clear the way for early elections the following year.
In their ruling on Thursday the judges said one of the main reasons for their decision was to restore the ability of the German government to act.
They added that the court had operated under enormous pressure, with campaigning already well under way, but said this had not affected their decision-making.
This weekend, the CDU holds its pre-election convention, and Mrs Merkel will face Chancellor Schroeder in a head-to-head television duel the following Sunday.
Mr Schroeder announced in May that he would seek an early election, arguing that the SPD needed a fresh mandate for welfare and labour market reforms after suffering a series of state election defeats.