The long-running case involves the Sosnovka-1 dacha west of Moscow, which a government property watchdog claims was bought by Kasyanov illegally and must be returned to the government.
"The ruling issued by a Moscow district court to suspend hearings [on the case] has been cancelled, and the case has been returned to the court for trial on the merits," the higher instance Moscow City Court said.
The trial was suspended January 29 for an additional inquiry, as the Federal Property Agency had failed to produce documents justifying the level of compensation sought, a court official earlier said.
The plaintiff is seeking some $4.1 million in damages for the 11.5-hectare luxury property, which it claims was acquired at a knockdown price through a fake auction set up by Kasyanov while he was still in office.
In February 2006, the Moscow Arbitration Court deemed the auction illegal, but stopped short of seizing the property, ruling that the ex-premier had bought it in good faith.
Earlier reports said that in September 1996, the state property committee signed a deal with Russian oil company Evikhon, whereby the company obtained a 49-year lease for Sosnovka-1.
Evikhon subsequently sold its tenant's rights to the state company VPK Invest, which in February 2003 received authorization from the property authorities to sell the dacha.
The Sosnovka-1 plot was then sold to Amelia, a company, which resold it to Kasyanov. On February 2, 2006, the Moscow Arbitration Court invalidated the sale of Sosnovka-1 to Kasyanov, but he was not deprived of the plot as the court ruled that he had been the bona fide purchaser.
The Federal Property Agency said that those deals had resulted in the illegal acquisition of state property.
President Vladimir Putin's first premier in 2000-2004, Kasyanov is now the leader of the opposition Russian People's Democratic Union. He has repeatedly accused the Kremlin of clamping down on civil and political liberties.