The 2nd U.S. Circuit Court of Appeals said New York's general business law requires a plaintiff to show only that deceptive advertising was misleading and that the plaintiff was injured as a result. A lower court judge twice previously tossed out the lawsuit.
In a statement, Oak Brook, Ill.-based McDonald's Corp. said "common sense tells you this particular case makes no sense," adding the ruling "simply delays the inevitable conclusion that this case is without merit."
A message left for the lawyer representing two children named in the lawsuit was not immediately returned.
The lawsuit alleges that tens of thousands of children have suffered obesity, diabetes, heart disease, high blood pressure, elevated cholesterol and other health problems after being misled about McDonald's products.
In an earlier ruling, U.S. District Judge Robert Sweet said consumers cannot blame McDonald's if they choose to eat at its fast-food restaurants.
"If a person knows or should know that eating copious orders of supersized McDonald's products is unhealthy and may result in weight gain," Sweet had written, "it is not the place of the law to protect them from their own excesses."