The Attawapiskat First Nation sought a temporary injunction to remove the manager appointed last year by Aboriginal Affairs Minister John Duncan.
The community argues the imposition of the outside manager threatened irreparable harm.
Chief Theresa Spence says the third-party management is costing the community money it should be spending on housing and other needs.
Judge Michael Phelan refused to issue the injunction.
In a ruling Friday, he said the community had not demonstrated that the third-party manager would cause real and lasting harm.
He did order the two sides to work together on acquiring 22 trailers to alleviate the community's housing crisis.
The trailers have to be brought in on ice roads, and their arrival date is uncertain because of weather.
However, the judge ordered the manager to pay for the trailers as soon as the proper invoices are handed over.
He said that doesn't mean the community, the applicant in the court case, has to accept the legitimacy of the third-party manager.
"The applicant shall not be required to accept, acquiesce or acknowledge the legality of the appointment of the TPM (third-party manager) in order to secure payment of the invoices," he wrote.
Attawapiskat lies close to the shore of James Bay and has a troubled past, including floods and housing shortages.
Last fall, it became a focus of national attention when Chief Spence declared a state of emergency over a housing crisis.
Families were facing the winter in rundown shacks or tents. The Canadian Red Cross flew in supplies.
Duncan appointed the financial manager in response to the crisis. His officials also arranged to acquire the stop-gap trailers.
The judge wrote briefly about the terrible conditions at Attawapiskat, noting: "How conditions such as these could occur in a country as rich, as strong and as generous as Canada has yet to be determined. That issue is for another day."
Spence and her fellow band councillors are bitterly opposed to the third-party manager.
Judge Phelan acknowledged the anger in the case.
"It is not necessary at this stage of the judicial review application to deal in depth with the various back-and-forth exchanges and positions adopted. It is sufficient to say that there is a significant amount of frustration, anger and distrust."
New Democrat MP Charlie Angus, who represents the area, says the ruling raises questions about the legitimacy of the third-party manager.
"The judge is sending a message that the third-party manager is not there to usurp the legitimate role of the band council," he said in an email.
"He is to pay the receipts. So the question comes back to, Why should such a poor community pay $20,000 a month to a guy who is simply there to rubberstamp the work the band is already doing?
"What needs to be clarified is why is the TPM sitting on money that should be going to teachers and the school?"
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