The Tesla chief called Vernon Unsworth a "pedo guy" after the diver accused him of grandstanding during the Thai cave rescue.
Elon Musk will go to court in December after a judge in Los Angeles denied his attempt to have a defamation suit thrown out.
The billionaire described Vernon Unsworth, who helped rescue 12 Thai boys and their football coach from a cave, as a "pedo guy" during a spat online.
Mr Musk attempted to have the case dismissed by claiming that he didn't intend to literally accuse the diver of "engaging in acts of paedophilia" but used what was "a common insult used in South Africa when I was growing up" and was "synonymous with 'creepy old man'".
Mr Unsworth, 63, had angered Mr Musk after dismissing the value of a mini-submarine the billionaire donated to the rescue operation.
Officials thanked the Tesla and SpaceX tycoon for his offer but said the vehicle was not practical. Mr Unsworth went further and said it "had absolutely no chance of working" and was a "PR stunt", adding: "He can stick his submarine where it hurts."
Mr Musk subsequently apologised for calling Mr Unsworth "pedo guy" but, a month later, again described him as a "child rapist" and wrote: "I f***ing hope he sues me."
Court documents say Mr Unsworth will have to spend his life "with the asterisk of paedophilia attached to his name" because of the accusations levelled against him online by Mr Musk.
The jury in the trial will have to examine whether Mr Musk was negligent for failing to check whether his description of Mr Unsworth as a "pedo guy" was untrue.
Proving negligence is easier than proving malice, according to Mr Unsworth's lawyer, although whether Mr Musk acted maliciously could impact the punitive damages which Mr Unsworth is seeking.
Vernon Unsworth took part in the Thai cave rescue
In a statement reported by Bloomberg News, one of Mr Musk's attorneys, Alex Spiro, said: "We look forward to the trial. We understand that, while Musk has apologised, Unsworth would like to milk his 15 minutes of fame."
Earlier this year Mr Musk agreed to seek his lawyers' approval before tweeting about Tesla's finances after saying he had secured funding to take the company private in 2018 at $420 (£325) a share, despite not having the money to pull off the deal.