The high court stripped Pinochet of his immunity as a former head of state, allowing Judge Alejandro Solis to question Pinochet, 90, in the investigation of 59 cases of torture and killing in the Santiago clandestine prison during his 1973-1990 dictatorship.
"Now people who were actually held in Villa Grimaldi can testify," Sebastian Brett, a researcher with Human Rights Watch, said of the ruling.
"I think that Villa Grimaldi is emblematic of the brutality of Pinochet's rule. It's where people were taken, kept in detention, tortured and then executed," said Mr Brett.
Ms Bachelet, a student in 1975, was detained with her mother and tortured in Villa Grimaldi jail. Her father, Air Force General Alberto Bachelet, was tortured while in prison and died six months later.
The torture centre was run by Pinochet's feared DINA secret police, which was overseen by his close associate, Manuel Contreras, who is serving a 12-year sentence for human rights abuses.
Pinochet was stripped of his immunity a year ago on other charges and faces prosecution for dozens of "disappearances" of jailed regime opponents who are assumed to have been killed as well as for crimes linked to secret bank accounts he maintained in the United States and other countries.
The resolution to lift his immunity will be officially announced next week, the court said. It had been approved 11 months ago by the Appeals Court in Santiago.
During Pinochet's 17-year rule, some 3,000 persons were murdered and "disappeared" according to an official count.
Under Chilean law, former presidents and lawmakers enjoy immunity, which must be lifted on a case-by-case basis if they are to face trial.
The Supreme Court's decision comes three days ahead of the 33rd anniversary of the military coup that brought Pinochet to power.
The September 11, 1973 coup ousted Socialist president Salvador Allende, who committed suicide in the government palace.
Chile's government has documented close to 30,000 cases of torture under Pinochet, and officers have been convicted of the crime, but he has not been formally charged with torture.