Juliet Breitman and another child were four years old when they raced their small bicycles on a Manhattan street and ran into Claire Menagh, 87.
Juliet's lawyer had argued Juliet was too young to be held negligent.
The judge disagreed, ruling Juliet's lawyer had presented no evidence she lacked intelligence or maturity.
According to court filings, in April 2009, Juliet Breitman and Jacob Kohn were accompanied by their mothers, Dana Breitman and Rachel Kohn, as they raced their bicycles along the pavement near the East River in New York's Manhattan borough.
'No bright line'
The children struck Ms Menagh, knocking her to the ground. She underwent surgery for a fractured hip and died three months later.
Ms Menagh - and later her son, acting as executor of her estate - sued the children, arguing they were "negligent in their operation and control of their bicycles". The estate also sued Dana Breitman and Rachel Kohn, saying they had consented to the race.
Juliet's lawyer sought to have the case dismissed, filing with the court a copy of Juliet's birth certificate showing she was four years and nine months old at the time of the accident.
Citing several cases involving young children who had been in accidents, New York Supreme Court Judge Paul Wooten ruled that Juliet, now six years old, could be sued.
While he noted that the law presumes children under age four are incapable of negligence, "for infants above the age of four, there is no bright line rule", he wrote in the decision.
He also wrote that the Juliet's lawyer had presented no evidence as to the child's lack of intelligence or maturity, nor that "a child of similar age and capacity" would not have understood the danger of riding a bicycle into an old woman.