The California Supreme Court blocked a measure that would divide the state in three from appearing on the November ballot.
The court's ruling states that because there are questions about the proposition's validity, the potential harm of putting it on the ballot now outweighs concerns about delaying the vote until a future election.
Prop 9 qualified for the November ballot last month.
Venture capitalist Tim Draper is leading the measure and has said it would be inappropriate for the court to block it from the ballot.
"The whole point of the initiative process was to be set up as protection from a government that was no longer representing its people. Now that protection has been corrupted. Whether you agree or not with this initiative, this is not the way democracies are supposed to work," Draper said.
The measure would split the country's most populous state into three new states of near-equal population: Northern California, California and Southern California.
Northern California would include cities between the Bay Area and the Oregon border. Southern California would begin in Fresno and cover most of the southern state. The "new" California would cover Los Angeles County and much of the coast below San Francisco Bay, the proposal said.
Opponents sued, arguing the proposal abolishes the state constitution, which cannot be done in a ballot initiative.