Thursday's ruling by the First Court of Appeals means Yates' murder retrial can begin as scheduled Monday.
Attorney George Parnham had argued indictments against Yates should be dismissed and prosecution halted or delayed. He claimed prosecutorial misconduct in Yates' first trial should prevent a retrial.
But the appeals court agreed with prosecutors' argument that Parham's case failed to show any misconduct, which must be proven for double jeopardy to be a concern.
"We are hopeful that we can now finally place our complete focus upon going to trial," prosecutor Alan Curry said after the ruling.
Parnham said his claims were made in good faith. "We believe that there was merit to the information presented," he said.
Parnham and his co-counsel, Wendell Odom, claimed prosecutors should have known testimony about a nonexistent episode of the television drama "Law & Order" by their expert witness, forensic psychiatrist Park Dietz, was false.
They say both prosecutors and Dietz had the necessary resources to determine whether the "Law & Order" episode existed.
Last year, the appeals panel based on Dietz's testimony. Dietz said his testimony was a mistake. Jurors learned of the incorrect testimony after they convicted Yates, but before they sentenced her to life in prison.
Yates, 41, who faces two capital murder charges, has again pleaded innocent by reason of insanity. Jurors in her 2002 trial rejected her insanity defense and sentenced her to life in prison in the deaths of the five children, who ranged in age from 6 months to 7 years.