The ruling marks the second time that the high court has ordered a halt of the No. 3 reactor at the Ikata nuclear power plant in Ehime Prefecture.
In making its decision, the court considered whether the operator and the Nuclear Regulation Authority's rules and risk estimates for an eruption of Mt. Aso, about 130 kilometers away, were adequate.
"Research on the active fault is insufficient and the Nuclear Regulation Authority's judgment that it is not a problem is incorrect," Presiding Judge Kazutake Mori said in handing down the ruling.
"(Shikoku Electric) needs to also take into account less than catastrophic eruptions at the caldera of Mt. Aso," he said.
Three residents of nearby Yamaguchi Prefecture were appealing a decision last March by the Iwakuni branch of the Yamaguchi District Court. The lower court ruled the plant could continue operations since the possibility of a large-scale eruption occurring during the reactor's operating life was low, and the regulatory authority's safety standards were adequate.