The five dams are to be built on two rivers in the sparsely-populated Aysen area of Chilean Patagonia.
The project was approved in May, after heavy backing from President Sebastian Pinera.
But the court has now ruled it needs to review the approval process.
It is not clear how long the court will take to decide on the matter.
The project has sparked a number of protests, some of which have seen violent clashes between demonstrators and the security forces.
The government says the dams are needed to meet the country's increasing demand for electricity.
But environmentalists say they will damage the area's fragile ecology and its tourist potential.
They also say the energy produced will be used mainly for the country's mining industry.
Rugged beauty
The river Baker is one of two rivers that will be dammed if the project goes ahead The five dams will be built on two fast flowing rivers that run into the Pacific - two on the river Baker, and three on the river Pascua.
They drain lakes in a region that is famous for its rugged beauty - a landscape of glaciers, ice-fields, mountains and fjords.
The dam project, which is a joint venture between a Chilean company and a Spanish-owed one, will cost some $3bn (?1.85bn) and is designed to generate 2,750MW of power.
The company, HidroAysen, says the project "represents a cost-effective, sustainable, reliable, and ecologically viable source of energy".
It says it involves flooding nearly 60 sq km (23 sq miles) of land, but will provide 4,000 jobs at its peak.
But other potential sticking points lie ahead for the company.
Correspondents say one of these could be approval to build the more than 2,000km (1,240 miles) of power lines needed to carry the electricity generated from the dams to the capital, Santiago.
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