The suit is part of Steven J. Hatfill's battle to restore his name, which was connected to the mailing of anthrax when Attorney General John Ashcroft said the former Army scientist was a "person of interest" in the investigation, the Washington Post reported Friday.
Five people died and 17 others became ill in 2001 when letters containing anthrax spores were mailed to two U.S. senators and network television anchors. No one has been charged with a crime in the case.
But Hatfill was named by Times' columnist Nicholas Kristof as a "likely culprit" because of his familiarity with anthrax.
The lawsuit had been dismissed by a federal judge in Virginia but Thursday an appeals panel, in a 2-1 ruling, reinstated it saying it "adequately alleges that Kristof's columns, taken together, are capable of defamatory meaning."
A Times spokesman told the Post the paper was "confident in our case. Mr. Kristof's columns were fair and accurate."