Judge Juan Guzman made the announcement nearly three months after questioning the 89-year-old former ruler and having him examined by doctors to determine whether he can stand trial.
Guzman said he made the decision to try Pinochet after carefully reviewing an interview Pinochet gave to a Spanish language television station in Miami.
He said he is convinced Pinochet is healthy enough to stand trial.
The trial of Pinochet is part of Guzman's investigation of the so-called "Operation Condor," a joint plan by the dictatorships that ruled several South American nations in the 1970s and '80s to suppress dissidence.
"This is a historic decision that must be celebrated by all democrats," said Viviana Diaz, member of an organization of dissidents who disappeared under Pinochet. "This is great news for all those Chileans who do not accept impunity in the violations of human rights."
Pinochet's defense attorneys announced they will appeal the indictment before the Santiago Court of Appeals and, if necessary, to the Supreme Court.
"This a tremendous abuse against the most basic human rights of a person," said Pinochet's chief defense lawyer, Pablo Rodriguez. "It is a known fact that judge Guzman has persecuted Gen. Pinochet for a long time."
It's the second time Pinochet faces trial for the abuses during his long reign. In 2001, he was indicted for the killings by the Caravan of Death, a military patrol that toured the country a few weeks after the 1973 coup, leaving 75 political prisoners killed.
Eventually, however, the Supreme Court ruled he was physically and mentally unfit to stand trial - a condition Pinochet's lawyers argue not only still exists but has worsened.
Pinochet has been diagnosed a mild case of dementia. He also has diabetes and uses a pacemaker.
But Guzman said reports he received from three doctors that examined Pinochet on his orders convinced him that the retired general can stand trial.
Guzman also said Pinochet's answers to a Miami TV interviewer indicated he was mentally alert.
Earlier this month, an appeals court stripped Pinochet of immunity from prosecution for a 1974 car bombing that killed an exiled Chilean general and the man's wife.
The 14-9 decision by justices on Santiago's Court of Appeals opened the possibility Pinochet could stand trial for the bombing that killed former army chief Gen. Carlos Prats and his wife, Sofia Cuthbert, in Buenos Aires.
Prats, a former chief of the Chilean army, had opposed the 1973 coup that put fellow general Pinochet in power, and was among the first of an estimated several thousand people killed during Pinochet's rule.
By Eduardo Gallardo