The decision to grant Mustafa a new trial for the murder of 30-year-old pop star Suzanne Tamim elicited cheers from his supporters in and outside the packed courtroom in downtown Cairo.
The 50-year old businessman was convicted last May of paying a retired Egyptian police officer, Mohsen el-Sukkary $2 million to kill Tamim, while she was in Dubai in July 2008.
According to Dubai investigators, el-Sukkary stalked Tamim to her apartment in the swanky Dubai Marina complex and entered using an ID of the management company from which she had recently bought her place, and slit her throat.
Tamim rose to stardom in the late 1990s on the force of her good looks and voice, but then hit troubled times, separating from her Lebanese husband-manager, who filed a series of lawsuits against her.
Tamim and Moustafa met in the summer of 2004 at a Red Sea resort, according to transcripts of Moustafa's interrogation that were widely published in Egyptian newspapers. She had sought his help to divorce from her husband, according to media reports.
Experts say it is customary in cases involving death sentences to give the defendants a second chance.
The case captivated Egyptians as it involved a member of an elite class often viewed as above the law.
Many had wondered if the 50-year-old real estate mogul tied to President Hosni Mubarak's son, Gamal, and an influential member of the ruling party, would get away with murder in a region where the rich are often thought to be immune.
The court decision to retry the case is certain to raise charges that Moustafa's influence will keep him from the gallows.