Pregerson wrote that although a costumed performance may not be a traditional form of speech, it is a constitutionally protected one.
Street performers said the ruling was a victory for their First Amendment rights.
Reports of aggressive panhandling and even fights involving unlicensed street performers led to a crackdown in May and June that resulted in about two dozen arrests for crimes that included blocking the sidewalk.
Since then, some performers said police have repeatedly ordered them away on threat of arrest.
Police had not decided whether to appeal the injunction. Officers stepped up their presence after numerous complaints from business owners and the public that costumed performers had made violent threats against tourists who refused to hand over cash after snapping photos, said LAPD Hollywood area Sgt. Robert McDonald.
The Associated Press contributed to this report.