Judge Santiago Pedraz at the National Court had refused on Monday to shelve the case of José Couso, a Spanish cameraman killed in Baghdad, despite a recent reform to restrict such probes.
Pedraz in 2010 issued international warrants for three US soldiers held responsible for the shelling of the Palestine Hotel which killed Couso, a cameraman for Spanish network Telecinco.
Pedraz acted under universal jurisdiction — a doctrine that allows judges to try certain atrocities committed in other countries.
Spain's parliament, dominated by the conservative ruling Popular Party, last month passed a government reform to restrict courts' powers to apply universal jurisdiction.
Pedraz refused to apply the reform to the Couso case, saying the new law breached the Geneva Convention on war crimes.
On Wednesday the state prosecution service filed an appeal against his decision, arguing Pedraz had exceeded his authority by pushing on with the case.
At the same time Manos Limpias, a litigious far-right pressure group, brought a suit against Pedraz, accusing him of "consciously acting unlawfully", court papers showed.
Last month's reform, criticised by rights groups, came after a lawsuit alleging atrocities by Chinese leaders in Tibet, which annoyed China, a major trading partner of Spain.
Spain has pioneered the use of universal jurisdiction since it was passed into national law in 1985.
The best known use of the doctrine occurred in 1998 when Chile's former dictator Augusto Pinochet was briefly arrested in London on a warrant issued by Spanish judge Baltasar Garzón.
Under the reform all such pending cases are to be suspended until it is determined whether they comply with the new law.
Opposition political groups voiced support for Pedraz.
"Judicial proceedings opened by a judge can only be suspended by a judicial decision, not a governmental one," said the parliamentary leader of the opposition Socialists, Soraya Rodríguez.
But her Popular Party counterpart Alfonso Alonso said that a judge "cannot disregard a law that has come from parliament".