Hubert Z. was a medical orderly at the camp from August 15, 1944 to September 14, 1945, when 14 trains carrying prisoners - including the teenage diarist Anne Frank - arrived at Auschwitz-Birkenau where many would eventually be killed in the gas chambers.
Prosecutors say Z. was both "aware of the purpose of the Birkenau camp as an extermination camp" as well as of its structure.
"Given his awareness, the accused lent support to the organisation of the camp and was thereby both involved in and promoted the extermination," said prosecutors in an earlier statement as they charged Z. for complicity in the "cruel and insidious killings of at least 3,681" people.
However, in a ruling in June, a court had found that the elderly accused was unfit to stand trial.
German media had reported that the man was suffering from dementia.
Following an appeal however, the high court of Rostock said Tuesday psychiatrists have found the former medic to have a limited ability to answer to the court.
Taking that assessment into account, the court acknowledged that the accused had "cognitive impairments and low physical capacity".
But it said these limitations could be compensated by regular breaks during the hearings as well as medical care.
It also threw out concerns that the emotional weight of the trial as well as the media attention could harm the accused.
Some 1.1 million people, most of them European Jews, perished between 1940 and 1945 in the Auschwitz-Birkenau camp before it was liberated by Soviet forces.
Frank, who arrived in Auschwitz with her parents and sister, was later transferred to another camp, Bergen-Belsen, where she died in March 1945.
Seventy years after the trials of top Nazis began in Nuremberg, Germany is racing against time to prosecute the last Third Reich criminals to make up for decades of neglect.
Around a dozen investigations are currently under way against former SS officers, just months after the so-called "Bookkeeper of Auschwitz" Oskar Groening was sentenced to four years in jail as an accessory to murder in 300,000 cases in which Hungarian Jews were sent to the gas chambers between May and July 1944.