However, Anthony Levandowski, the man at the centre of the case, who until recently led the efforts after selling his self-driving truck startup to Uber, should not work on parts of it the preliminary injunction said.
He was removed from the work related to Lidar technology at the end of April ahead of the hearing on an injunction sought by Waymo to stop Uber working on driverless cars.
Google's driverless car arm alleges Levandowski stole trade secrets related to Lidar while working their and before founding Otto which was later acquired by Uber.
And judge William Alsup said today that Waymo has shown "compelling evidence" that Levandowski downloaded confidential files before he departed the company and that Uber "likely knew" or should have known he took materials from Waymo when it considered buying Otto.
But the ruling, made in a San San Francisco court, also said Waymo's alleged trade secrets had not been identified in Uber's self-driving technology.
Alsup has ordered the documents to be returned.
Uber said in a statement: "We look forward to moving toward trial and continuing to demonstrate that our technology has been built independently from the ground up."
And a spokesperson for Waymo said: "Competition should be fueled by innovation in the labs and on the roads, not through unlawful actions. We welcome the order to prohibit Uber’s use of stolen documents containing trade secrets developed by Waymo through years of research, and to formally bar Mr Levandowski from working on the technology."
The decision to let Uber keep its driverless car development going comes as Waymo teamed up with Uber's biggest rival in the US, Lyft.
“We’re looking forward to working with Lyft to explore new self-driving products that will make our roads safer and transportation more accessible," Waymo said.
“Lyft’s vision and commitment to improving the way cities move will help Waymo’s self-driving technology reach more people, in more places.”