Lawyers for the sister of King Felipe VI, a prosecutor and a state attorney representing Spanish tax authorities earlier this month all said the charges against Cristina should be thrown out because government officials agreed she had committed no crimes and should face at most an administrative fine for tax evasion.
But the judges disagreed, according to a statement released by the court.
The judges ended up siding with an investigative judge who spent four years probing the case and ruled she could be tried because of evidence presented by private anti-corruption group Manos Limpias (Clean Hands).
The Royal Palace said it had no comment to make beyond reiterating its total respect for the judicial decisions.
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During the trial, the judges will have to weigh whether the couple criminally abused the Aizoon real estate consulting firm described in court documents as a "front company" to fund luxury vacations, throw parties at their modernist Barcelona mansion and pay for salsa dancing classes.
The trial is the first time that a member of Spain's royal family has faced criminal charges since the monarchy was restored in 1975.
The princess' husband, formerly the Duke of Palma, is accused of using his title to land the deals for the Noos Institute he ran with business partner Diego Torres.
The case is being heard in Palma de Mallorca, the regional capital of Spain's Balearic Islands, because many of Urdangarin's business deals under investigation were for the islands.