Lawyers for Phillip Garrido had argued that he is not mentally competent for trial, and a jury was set to hear arguments on the competency issue.
But both sides agreed instead to let El Dorado County Superior Court Judge Douglas Phimister decide the issue.
After the agreement was announced in court, Phimister quickly issued his ruling, based on numerous psychiatric reports.
Dugard was 11 years old when she was kidnapped in 1991 from near her South Lake Tahoe home and kept prisoner in a shed and backyard near Antioch, Calif.
Her ordeal resulted in a $20 million settlement from the state of California. The settlement acknowledged the state's repeated missteps in supervising Garrido, a convicted rapist who was on parole at the time of the kidnapping.
The Associated Press contributed to this story.