The government filed a motion to impeach the country's first female Chief Justice Sushila Karki last Sunday after the two main parties in the coalition accused her of political interference.
The move came just days after Ms Karki overturned the government's choice for chief of police.
The order issued by the top court said that the government's move went against "the spirit of the constitution".
Supreme Court spokesman Bishwaraj Paudel told AFP that Ms Karki would resume her duties from Sunday.
The UN human rights chief harshly criticised Nepal's efforts to impeach Chief Justice Sushila Karki, whose supporters say has taken a strong stance against corruption during her year-long tenure as head of the Supreme Court.
"I urge the Nepal authorities to respect the independence of the judiciary (and) to withdraw what appears to be a politically motivated impeachment motion," United Nations rights chief Zeid Ra'ad Al Hussein said in a statement.
Nepal emerged from a brutal decade-long Maoist insurgency in 2006, which brought the end of the country's 240-year-old Hindu monarchy.
But Nepal's transformation to a federal state has been marred by political infighting and successive governments have dragged their feet on bringing perpetrators of abuses committed during the civil war to justice.
On Ms Karki's watch, a lower court last month sentenced three soldiers to 20 years in jail for the murder of a teenage girl during the war, only the second conviction for crimes committed during the conflict.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.