The decision by the Cairo Appeals Court for Urgent Matters overturns an earlier ruling that banned leaders of Mr Mubarak's National Democratic Party from taking part in any elections. The party was dissolved following the uprising that toppled Mr Mubarak in 2011.
A number of the party leaders formed new parties, while others joined existing ones. In 2012, an Islamist-dominated committee drafting the country's new constitution pushed an article in the charter that bars the NDP leaders from taking part in political life for 10 years. Following the ouster of Islamist President Mohammed Morsi, the article was scrapped when amendments were made to the charter.
The appeals court said today the lower court had no jurisdiction to bar people from running for elections. At the time, the lower court didn't define what constituted being a party leader.
Observers are predicting former NDP members will make a strong comeback in parliamentary elections expected later this year, because they still have strong family and tribal networks and a tight system of patronage developed during the Mubarak years.
The country's other most powerful political force, the Muslim Brotherhood, was declared a terrorist organisation by the government. The Brotherhood's political party is facing litigation calling for its dissolution. Security forces also went after the group's leaders, imprisoning thousands of its members and accusing it of waging a violent campaign against the government.
The Brotherhood denies it adopts violence and is keeping up protests against the government, accusing it of orchestrating a coup.