She also dismissed the Crown's bid for a judicial review of the lower court decision.
Dotcom denies charges of criminal copyright violation, conspiracy and money-laundering in relation to his Megaupload filesharing website, which once carried 4 per cent of the world's internet traffic.
He is locked in a legal and costly battle with authorities who want to extradite him to the United States to answer the charges.
Justice Winkelmann said the role of the extradition court was "modest", and the process could not take over the role of the trial court.
But it had the same character as a committal process, or a depositions hearing, which would assess evidence before a full trial.
As part of that process, the defence could present its own evidence, test the prosecution's claims and examine witnesses, the judge said.
She also found the "record of case" - the document that laid out the argument for extradition - did not meet legal requirements.
The judge said the FBI was under an "obligation of candour" to provide any evidence which could affect the court's judgment on whether the extradition threshold had been met - and no information had been provided to support the FBI's claims.
The document "did not comply", she said.
Justice Winkelmann said Dotcom had a legal right to see the evidence on which he was to be extradited.
"Without access to materials relevant to the extradition hearing phase, the person sought will be significantly constrained in his or her ability to participate in the hearing, and the requesting state will have a significant advantage in terms of access to information."
* Dotcom returned to the High Court at Auckland yesterday to seek access to his frozen cash - this time to pay lawyers' bills, which he says now total millions of dollars.
The search of Dotcom's Coatesville mansion, carried out by armed police, and the seizure of evidence were ruled illegal because they were based on invalid search warrants.
