Judge Daniel ruled, as he has in other recent high-profile cases, that Diana Patricia Santillana Galeano's detention without a bond hearing is unlawful because it violates her right to due process.
The government is ordered to hold the bond hearing on or before Nov. 18. The hearing that was originally set in federal court Thursday has been canceled.
Parents who leave their children at Rayito de Sol Spanish immersion day care and preschool on Chicago's North Side voiced concern last week after Santillana Galeano was detained.
The Colombian day care teacher was being held at the Broadview U.S. Immigration and Customs Enforcement facility before being transferred to Clark County, Indiana, as of last Friday.
A federal judge previously barred the Trump administration from removing Santillana Galeano, 38, from the U.S. and transferring her to any federal jurisdiction outside of Illinois, Indiana and Wisconsin, court documents show.
The U.S. Department of Homeland Security said Santillana Galeano was arrested for human trafficking. A statement from the agency alleges she paid traffickers to bring to two teenage children to the U.S.
DHS reports Galeano and a man driving her car refused to stop and then fled into the day care, barricading themselves inside.
Some who witnessed the incident and viewed video at the day care refute that claim, instead alleging armed ICE agents went room to room inside the day care.
Court records state Santillana Galeano has applied for either asylum or withholding of removal and was granted a work permit that is valid through Nov. 12, 2029.
Judge Daniel also ordered a bond hearing for the father of a teen cancer patient, who was being held in Clark County.
ABC News contributed to this report.