McCarrick, 93, is the highest-ranking U.S. Catholic official to face charges in the sweeping scandal over the systemic sexual abuse of minors in the Church.
He has been accused of sexually assaulting a teenager in Wisconsin in 1977.
But after McCarrick was diagnosed with dementia, judge David Reddy said Wednesday he "makes a finding of incompetence and suspends the matter due to competency," according to online court records.
Reddy said he did not have the authority to dismiss McCarrick’s case outright and a review hearing was scheduled for Dec. 27, the records showed.
McCarrick once wielded significant influence in Washington as the Church's highest official there.
But in a first for the Church, Pope Francis defrocked him in 2019.
A Vatican investigation found that he had hidden regular sexual contact with adult seminarians and children.
McCarrick's actions described in the report spanned decades, and the Vatican was accused of ignoring allegations against him while promoting him ever higher.
In April, a judge in Massachusetts ruled that McCarrick was cognitively unable to stand trial for sexually assaulting a teenage boy five decades ago.