The Supreme Court of Madrid announced on Friday that it has provisionally suspended a plan to modify the capital's urban plan - a move that would have facilitated the stadium overhaul.
The legal intervention comes amid the opening of proceedings by the European Commission looking into possible state aid given to Real.
Campaign group Ecologists in Action had also requested an injunction over the project, which has now been granted.
Earlier this year, the UEFA Champions League holders outlined ambitious plans for the remodelling of their iconic 81,000-capacity home, which was opened in 1947.
The new-look facility is due to include a hotel and shopping complex, with work reportedly pencilled in for completion by 2017.
In a statement, the Tribunal Superior de Justicia de Madrid said: "The First Section of the Division of Administrative Litigation of the Superior Court of Justice of Madrid has announced the suspension of the agreement ... of Specific Modification of the General Urban Plan, which empowered Real Madrid to lift buildings near the stadium Santiago Bernabeu.
"The Court accepts the injunction requested by Ecologists in Action AEDENAT that has informed the initiation of judges by the European Commission (EC) of proceedings in relation to any State aid to Real Madrid CF in that operation.
"The resolution notes that on November 29, 1996 Real Madrid signed an agreement with the city of Madrid whereby the club ceded land located in the Sports City and in exchange, the City agreed to provide Real Madrid various fields.
"The Section believes that the opening by the EC of a procedure of these characteristics is sufficient for the adoption of the requested injunction."
Real have 10 days to appeal the decision.