The decision by Manhattan Judge Joel M. Cohen means that the nearly 2-year-long legal battle can continue. It comes after mass shootings in New York and Texas last month rekindled debate over US gun policy and refocused attention on the NRA.
The New York case began when James, a Democrat, filed a lawsuit accusing some top NRA executives of financial mismanagement and seeking to dissolve the organization. The job of the attorney general includes oversight of nonprofit organizations incorporated in New York, where the NRA was founded in 1871.
Cohen turned down James' request to close the NRA in March. However, the judge allowed the case to proceed, with the possibility of fines or other remedies if the attorney general prevailed.
In a court filing last year, the NRA accused James of waging a blatant and malicious retaliation campaign in response to its views. The group attempted to stop the lawsuit.
Cohen dismissed those arguments.
"The record simply does not support the narrative that the attorney general's investigation into these undeniably serious matters was nothing more than a politically motivated and unconstitutional witch hunt," he wrote, noting that the probe was sparked by reports of misconduct and uncovered additional evidence.
The decision, according to James, confirms the suit's legitimacy and viability.
In a statement, she said, "Our fight for transparency and accountability will continue."
NRA lawyer William A. Brewer III said the organization was disappointed but would continue to fight the case because it believes it was unfairly targeted.
The NRA believes the NYAG's pursuit was fueled by her opposition to the organization and its First Amendment activities in support of the Second Amendment, he said in a statement abbreviating the attorney general's title.
Following the recent shootings in Buffalo, New York, and Uvalde, Texas, Congress is under renewed pressure to act following years of partisan gridlock on gun legislation.
The House has passed legislation to raise the age limit for purchasing semiautomatic weapons and to establish federal red flag laws, which allow for the confiscation of firearms from people who pose a high risk of harming themselves or others. Historically, such initiatives have failed in the Senate.
Senators from both parties have been discussing a framework for dealing with the issue, but no agreement has been announced.
The NRA, a long-standing political force that has lost some clout in recent years due to financial scandals, has long insisted that mass shootings are no reason to restrict gun access, arguing that the solution is for law-abiding people to have firearms to defend themselves and others.
The message was echoed at the organization's convention last month in Houston, just days after a gunman killed 19 children and two teachers in Uvalde.
Rallies calling for significant changes to gun laws are planned in Washington and across the country this weekend, with tens of thousands expected to attend.
Meanwhile, the Supreme Court is embroiled in a national tug of war over the role of guns in American society. The Supreme Court is expected to issue their most significant gun ruling in more than a decade, potentially making it easier to be armed on the streets of New York and other major cities.