Maricopa County Superior Court Judge Margaret Downie ruled that state law doesn't appear to allow for the halting of vote counting as the opponents of Proposition 200 had requested.
The Arizona Republic said an immediate appeal to the state Supreme Court was expected.
Prop 200 would require applicants for welfare and other services to have valid proof of citizenship, however opponents contend it would unfairly target Latinos and would thrust state employees into the role of immigration agents.
Constitutional experts had agreed the wording issue was serious, and the Republic said Downie noted from the bench that she regretted last week's challenge had not been filed earlier.
She noted the ballots were printed in August, and a significant number of early ballots had already been mailed into county clerks' offices.