Auctioneer Darren Julien and his attorney claimed victory after the hearing, saying they do not expect other efforts to block the sale to succeed.
"We have to proceed because we have no choice," Julien said.
His firm, Julien's Auction House, has spent more than $2 million arranging the sale of the Neverland items and could go bankrupt if the sale was stopped, his lawyer told Los Angeles Superior Court Judge Brett Klein.
Klein's ruling will "have no impact whatsoever" on the injunction motion, said Alan Gutman, who is representing Jackson's company, MJJ Productions. That hearing will come before a different judge.
Jackson did not attend Friday's hearing. But his father, Joe Jackson, sat in the audience and after Klein's ruling, smiled and shuffled out of the courtroom. He declined to comment afterward.
MJJ Productions sued Julien's Auction House last month, claiming Jackson hadn't authorized the sale of items taken from his former home at Neverland Ranch.
Gutman has argued that an agreement signed by Jackson's representative, Tohme Tohme, and Julien's Auction House is unenforceable under California law.
But Julien's lawyer, Jerry Hawxhurst, said the agreement gave the firm the right to sell the items as planned.
"The contract is clear as well water," Hawxhurst said.
Julien and Jackson's representatives agreed to allow some of the items to go on tour to promote their sale while the lawsuit proceeds.
The singer has struggled to pay his debts since his financial empire began to crumble following his arrest in 2003 on charges that he molested a 13-year-old boy at the ranch. A jury acquitted him of all charges.
Last year he faced foreclosure on Neverland, the 2,500-acre property nestled in the hills of Santa Barbara County's wine country, 120 miles northwest of Los Angeles. He was bailed out by Colony Capital, and months later transferred the deed to Neverland to another entity he partially controls.
Jackson plans a series of concerts in London in July that he has said will be his last in the British capital.
Julien has been entrusted to preside over numerous auctions of famous memorabilia. Some recent celebrity sales have included items once belonging to Ozzy Osbourne, Bob Hope and rare behind-the-scenes footage of Marilyn Monroe and Clark Gable on the set of the film "The Misfits."
"The reason he hired us was to do a first-class auction," Julien said Friday. "He worked with us for eight months to do an auction."
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