Chancellor Russell Perkins ruled Wednesday after a four-hour hearing that McGraw can sign with another record label.
Curb Records sought to prevent McGraw from recording or signing with another label until he fulfilled what Curb believed was his obligation for a fifth album.
McGraw is accused of breach of contract, and that trial is scheduled for July.
The performer and his wife, singer Faith Hill, were in court Wednesday. McGraw did not testify.
His attorneys argued that Curb is trying to put his career on hold. He's been under contract with Curb since 1997.
