The charges, relating to a multi-billion dollar arms deal, were dropped by the chief state prosecutor in a move that cleared the way for Zuma to be elected president just weeks later.
“The decision… to discontinue the charges against Mr Zuma is irrational and should be reviewed and set aside,” Pretoria High Court judge Aubrey Ledwaba said.
“Mr Zuma should face the charges as applied.”
The prosecutor had justified dropping the charges by saying that tapped phone calls between senior officials in then-president Thabo Mbeki’s administration showed political interference in the case.
The recordings, which became known as the “spy tapes”, were kept secret but finally released in 2014 to the main opposition party, the Democratic Alliance (DA), after a five-year legal battle.
DA leader Mmusi Maimane said Friday’s court ruling was a major blow against the president, who has faced months of criticism over various corruption scandals and the country’s dire economic outlook.
“Today is a great victory for the rule of law. Ultimately Jacob Zuma must face prosecution,” Maimane said after attending the court hearing.
“We are deeply, deeply delighted. Jacob Zuma must have… his day in court.”
The DA called for the National Prosecuting Authority to immediately revive the 783 charges of corruption, racketeering, fraud and money laundering dating back to 1999.
But the legal wrangling is set to continue, with the ruling likely to go to appeal.
“These charges were formally withdrawn… and as such there is no pending litigation before court against President Zuma,” the presidency said in a statement.
“The President has noted the decision of the court and will give consideration to the judgement and its consequences.”
– A weakened president? –
The president last month lost another major legal case when the country’s highest court found he violated the constitution over the use of public funds to upgrade his private residence.
The so-called “security” work, which cost taxpayers $24 million, included a swimming pool, chicken run, cattle enclosure and an amphitheatre.
The DA and other opposition parties attempted to impeach him, but the ruling African National Congress (ANC) used its majority to easily defeat the motion in parliament.
Zuma has also been beset by allegations that a wealthy Indian migrant family had such influence over him that it could decide ministerial appointments.
Pressure on the president to be ousted or to resign has grown with several veteran leaders of the party that brought Nelson Mandela to power in 1994 calling for him to step down.
Zuma, 74, will have completed two terms in 2019 and is not eligible to run for president again, but the ANC — which is packed with his loyalists — could replace him ahead of the next general election.
Last week, a commission he set up cleared all government officials of corruption over the 1999 arms deal.
Zuma himself was accused of having accepted bribes from international arms manufacturers.
His advisor, Schabir Shaik, was jailed for 15 years on related charges in 2005, with the judge saying there was “overwhelming” evidence of a corrupt relationship between the two.
Shaik was released on medical parole in 2009, the year Zuma was elected president.
Opposition parties hope to gain ground against the all-powerful ANC at local elections on August 3.
“The judgement may not necessarily force the president to resign,” Shadrack Gutto, director for the Centre for African Renaissance Studies at the University of South Africa, told AFP.
“He will try to manoeuvre through the legal processes and so on, but it could have serious implications for the ruling party as we go to elections.”
Zuma’s competency was also questioned when he sacked two finance ministers within days in December, triggering a collapse in the rand and a major withdrawal of foreign investment.