U.S. District Judge Arun Subramanian announced the decision in a written order, after hearing arguments during a two-hour hearing on Nov. 22 in Manhattan federal court.
Combs had previously been denied bail three times since his arrest, with multiple judges citing a risk he might tamper with witnesses.
The rapper and producer pleaded not guilty on Sept. 17 to charges that he used his business empire, including his record label Bad Boy Entertainment, to sexually abuse women.
Prosecutors said the abuse included having women take part in recorded sexual performances called "freak offs" with male sex workers who were sometimes transported across state lines.
Combs, 55, has denied wrongdoing, and his lawyers have said the sexual activity described by prosecutors was consensual.
His defense lawyers argued he should be confined to an apartment on Manhattan's Upper East Side, where he would be monitored around the clock by private security personnel he would pay for, and be barred from having contact with alleged victims or witnesses.
But prosecutors said it was unlikely Combs would abide by those rules.
From behind bars at the Metropolitan Detention Center, Combs used other inmates' identification numbers to make phone calls in violation of jail policy designed to monitor communications, prosecutors said. Defense lawyer Alexandra Shapiro said such sharing among inmates was routine.
Prosecutors also said a 2016 hotel surveillance video of Combs assaulting former girlfriend Casandra Ventura, known as Cassie, showed there was a risk he would act violently if released.
"This video is evidence that the defendant is a violent abuser and that he's a danger to the community," prosecutor Christine Slavik said at the hearing. "The defendant has engaged in physical, sexual and emotional abuse of his romantic partners for years."
Defense lawyer Marc Agnifilo disputed there was a risk Combs would act violently.
"There's a zero percent chance of that happening," Agnifilo said at the hearing.
Combs apologized in May after CNN broadcast the video showing him kicking, shoving and dragging Cassie in a hotel hallway. Agnifilo said he had never denied the incident, but said the video was not evidence of sex trafficking.
"It's our defense to these charges that this was a toxic, loving 11-year relationship," Agnifilo told the court.
