Inocente Montano Morales, 73, will remain in custody pending final approval for extradition by US Secretary of State John Kerry, which is likely to be a formality.
Montano Morales, who previously served time in a US prison for immigration fraud and perjury, was El Salvador's deputy defense minister at the time the Jesuit priests – who were seeking an end to the nation's civil war – were slaughtered.
Six priests, their housekeeper and the housekeeper's 16-year-old daughter were gunned down in their residence on the campus of the Universidad Centroamericana in the capital San Salvador.
Five of the priests were Spanish nationals, including a university rector.
Montano Morales has been indicted in Spain, along with 19 other former members of the Salvadoran military, of the murder of the Spanish nationals.
“The court finds sufficient evidence contained in Spain’s submissions to warrant a finding of probable cause to believe… he committed the charged offences,” wrote Federal Court Judge Kimberly Swank, based in North Carolina.
The Center for Justice and Accountability, a non-profit rights organisation, praised the move.
“This finding is a vindication of the years of struggle of the Salvadoran people against a repressive military which tried to turn reality on its head by calling anyone who defied it – including the Jesuits priests – terrorists,” said senior legal advisor Carolyn Patty.
El Salvador's civil war raged from 1980 to 1991, claiming the life of some 75,000 people.