Belgium had asked the International Court of Justice (ICJ) to order Senegal to place Mr Habre under custody to prevent him from fleeing justice.
But the ICJ said it was satisfied with Senegal's assurances it would not let him go, before the trial in Dakar.
Belgium charged Habre in 2005 with crimes against humanity and torture.
It has also been asking the ICJ to have Mr Habre extradited to Belgium, where survivors have filed a case against him.
But court president Hisashi Owada said: "Senegal gave a formal assurance on several occasions... that it will not allow Mr Habre to leave its territory," reported AP news agency.
Mr Habre, sometimes dubbed "Africa's Pinochet", settled in Senegal after he was deposed in 1990 by Chadian President Idriss Deby. He now lives in a villa in Senegal's capital, Dakar.
He is accused of killing and torturing tens of thousands of opponents during his eight-year rule, charges he denies.
Senegal arrested Mr Habre in November 2005, but a court rebuffed Belgium's extradition request.
Senegal's President Abdoulaye Wade warned last year he might free Mr Habre if the international community did not foot the estimated $36m (£23m) cost of holding the trial.
Reed Brody, of Human Rights Watch, said the court had made the right decision and urged the international community to help fund the trial, for which no date has been set yet.
"The important thing now is to get moving," Mr Brody said.